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According to the latest JLL Property Market Monitor released this week, the overall rental market for Class A office space in Hong Kong is declining at a more moderate level in August 2020 as the third wave of the COVID-19 pandemic recedes.
The rate of new apartment rentals also increased slightly, up 10% MoM in August. Net sales improved, albeit still in negative trend at -147,500 square feet, the lowest negative so far in 2020 year. Movement outside the Central Station continued as tenants adhered to austerity regime. Among the most notable deals, the Hong Kong Mortgage Corporation reportedly leased 73,000 sq. Ft (Gross Floor Area or GFA) at Too Harbor Square in Kwun Tong to move from Central.
Alex Barnes, Head of Markets at JLL Hong Kong, says: “The rent decline in August was relatively modest compared to the first half of 2020. Overall, office rents fell 1.7% from the previous month, while on average, office rents fell. more than 2% per month for the first six months. More and more companies are active in the market, considering their real estate needs in the second half of the year, although cost savings remain a key consideration. Lower rents have spurred some sporadic upgrading activity in the Central Region, and are likely to continue towards the end of 2020 and 2021. "
In August, the largest drop in rents was recorded in the Central District - -2.5% compared to the previous month, as the vacancy rate rose to 6% for the first time since December 2005. The number of new leases was limited, with some transactions being made by cost-saving tenants. transition to stimulated options on the submarket. The leased areas on the submarket continued to increase, amounting to about 520,000 sq. Ft NFA (2.2% of class A office stock), for the first time since October 2002 exceeded the 500,000 sq. M mark. Feet.
In the retail market, Nelson Wong, head of research at JLL in Greater China, also commented, "The rental market as a whole has been slow, the cost of renting shops on the main street has been under pressure due to the large number of vacancies in high-end locations."
According to market sources, Bauhaus rented two connected street stores (1,266 sq. Ft.) At Sun Kong House in Mongkok for a monthly rent of HK $ 260,000, paying 68% less than its previous tenant, Nature Republic.