Central office vacancy rate hits three-year high of 2.6% in July

The occupier market contracted to 56,100 sqft due to subdued leasing demand.

Central's office vacancy rate was pushed up to a three-year high of 2.6% in July from 2.3% in the previous month as the occupier market contracted to 56,100 sqft (5,211.86 sqm) due to subdued leasing demand, according to a JLL report.

In contrast, the overall office market recorded a positive net uptake of 75,900 sqft (7051.34 sqm) during the same period driven by leasing activity outside of Central, notably from Hong Kong East. Notably, Standard Chartered leased 18,700 sqft (1737.29 sqm) at Oxford House to accommodate the expansion of their virtual banking arm.

Meanwhile, overall Grade A office vacancy fell to 5.3% in July from 5.4% in June, whilst the average monthly rent declined to $77,200 during the same period from $77,300 last month.

Office rents dipped 0.1% MoM in July as leasing demand remained subdued, according to a report by JLL. Rents in Central and Wanchai/ Causeway Bay continued to retreat, with falls of 0.2% MoM and 0.1% MoM, respectively. Kowloon East was the only major submarket to record growth as rents inched up by 0.2% MoM.

“Few office properties changed hands during the month as investors digested the heightened uncertainty in global economic outlook as well as escalating civil unrest. Still, pricing remained relatively unchanged as vendors continued to hold firm on asking prices. Notably, a small sized unit in the mid-zone of Admiralty Centre Tower 1 reportedly sold for $200m or $30,465 psf with a vendor booking gain of 272% over a ten-year period,” the report noted.