Office net absorption slumps to 189,300 sqft in February

Rents in Central also contracted by 3.2% MoM to $116.1 psf.

Overall office market recorded a negative net absorption of 189,300 sqft in February, according to a JLL report. The decline is caused by tenants delaying their decisions on office requirements due to the COVID-19 outbreak.

Overall office vacancy in Central,Causeway Bay, Hong Kong East, Tsimshatsui, Kowloon East rose by 0.2 percentage points (ppt) MoM to 6.3% in end-January to February. Causeway Bay records the highest vacancy growth as it inched up 0.4 ppt MoM to 4.8% in February from 4.4%. The vacancy rate in Hong Kong East remained flat at 2.8%.

“Rental decline in the overall market worsened in February, down 2.2% MoM, as drop in leasing demand contributed to higher vacancy rates across all major office submarkets,” said Nelson Wong, head of research at JLL in Greater China.

Rents in Central also contracted by 3.2% MoM to $116.1 (US$14.97) psf, which is said to be the sharpest monthly decline since the Global Financial Crisis in 2008-2009.

Negative net absorption in Central also amounted to 36,300 sq ft last month as some firms are moving their offices outside this area. JLL noted that this is because tenants continue to seek cost-effective options.

Amongst these transactions is TransUnion Asia leasing 17,700 sqft of Gateway Tower 5 in Tsim Sha Tsui, expanding the Harbour City portfolio. Two law firms currently based in core Central also committed to premises in Admiralty and Quarry Bay respectively.
 

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