Co-working office firm Spaces signs largest rental deal this year in Hong Kong’s Central

Amsterdam-based co-working office provider Spaces has agreed to rent an entire grade B office block in Hong Kong’s Central, the largest leasing transaction in terms of area in the business district this year and a new sign of growing demand for shared office space in the city.

The company will rent the 77,000 sq ft Sun House at 90 Connaught Road, according to the sole leasing agent, CBRE. Sun House, built in 1977 and owned by a private firm Sun Company, is undergoing renovation which is expected to be completed in mid-2018. The deal was signed on Friday. The price was not disclosed.

There is strong demand for co-working operators as it is a global trend in future office operation, said Alan Lok, executive director, advisory and transaction services for offices at CBRE.

“Many operators are aggressively expanding overseas to turn themselves into global players,” he said.
Spaces also rents 40,000 sq ft at the Lee Gardens Three complex in Causeway Bay, said Lok.

In Hong Kong, there are only 30 co-working operators, compared to 200 in Shanghai and Beijing, he said.

Hong Kong’s shared office spaces are getting more innovative

According to CBRE, the total footprint of the co-working sector in Hong Kong will increase to more than 1.18 million sq ft by the end of 2017. This is a big increase over the 700,000 sq ft of co-working space in 2016 and 500,000 sq ft in 2013.

“We see a lot of opportunities in this sector as an increasing number of both local firms and multinational corporates are tapping into co-working spaces to build flexibility in their corporate real estate portfolios,” said Tom Gaffney, managing director at CBRE Hong Kong, Macau and Taiwan.

In Hong Kong, co-working space operators, as well as serviced offices which indicated that they have co-working elements, currently occupy 960,000 square feet of office space, according to CBRE. In the first half of 2017, these operators secured around 222,000 square feet of new space, 35 per cent of which were grade A offices.

Mainland Chinese companies had been one of the main driving forces behind the office rentals market in Central, but Lok said fewer such companies were looking for space in the area, most likely because Beijing’s restrictions on overseas investment was making it difficult for them to invest.

Nigel Barnes, vice-president for development at Spaces Asia Pacific, said the Sun House project is the latest step in its expansion into Asia after Tokyo, Nagoya, Singapore, Chennai and Shanghai.