Hong Kong landlords ponder how to fill large retail spaces as consumer slowdown gathers pace
- Veteran property observers urge landlords holding vacant retail space to subdivide and reduce rents
- Potential lease termination by HMV begs the question of what other tenants can fill the vacuum as consumer spending softens
Hong Kong landlords are likely to struggle to find suitable tenants that could fill the three large retail locations currently occupied by troubled music retailer HMV – with floor space as big as 40,000 square feet – in the city’s most prime locations.
The future of the HMV shops in Central, Causeway Bay and Kowloon Bay have been in question after the landlords of the respective spaces filed separate lawsuits over the past two weeks collectively seeking more than HK$5 million (US$639,738) in unpaid rent and other charges.
A potential lease termination by HMV begs the question of what other retail tenants would be in a position to take up such large spaces.
Veteran property observers say the best solution for landlords holding vacant retail space is to subdivide and reduce rents.
“Retailers are not willing to open a new store or expand at this moment,” said Helen Mak, head of retail services at Knight Frank. “One single tenant taking up such a large space would be impossible. Landlords, particularly those holding large empty spaces, just have to cut rent.”