Stronger user demand is present in the Hong Kong office market.

In January 2022, just before the pandemic got worse, overall Grade A office leasing activity registered net absorption of 647,100 square feet, according to JLL’s most recent Hong Kong Property Market Monitor Report.

Thanks to increasing occupier demand and the realization of pre-commitments in new supply, Hong Kong’s office market experienced positive net absorption for the fourth month in a row. Additionally, tenants kept looking for quality in their office space. FedEx, a logistics service provider, leased 40,600 square feet (GFA) at Landmark East in Kwun Tong as part of one of the significant transactions to consolidate its offices in Kowloon East.

As of the end of January, the overall vacancy rate for Grade A offices had decreased to 9.4%, while the vacancy rate in Central had decreased from 8.0% to 7.7%. With a 12.4% vacancy rate, Kowloon East maintained its lead among the major office submarkets.

Head of Agency Leasing at JLL in Hong Kong, Alex Barnes, said, “The increased leasing demand helped the overall net effective rents, which had already increased by 0.2% in December, increase by another 0.2% m-o-m in January. In the same month, rental growth was also moderate in Central, Tsimshatsui, and Kowloon East. The impact on the office market will be less than it was during the initial impact felt in 2020, despite working arrangements now returning to appropriate responses to the current increase in infections in Hong Kong. After the pandemic situation stabilizes, we anticipate office demand to keep improving.”

Nelson Wong, Head of Research at JLL in Greater China, commented on the industrial sector as follows: “January saw continued activity in the industrial leasing and investment markets. Numerous logistics players are looking for additional space to take advantage of the increase in merchandise trade.”

Hankyu Hanshin Express, one of the transactions, increased its presence at the Asia Logistics Hub SF Centre in Tsing Yi by leasing 58,982 square feet, and HKAIR Logistics committed to a full floor of 28,536 square feet at the Watson Centre in Kwai Chung for internal growth.