Luxury brands continue to expand in Hong Kong’s office market

HONG KONG, April 9, 2024 – Luxury brands which benefited from the return of mainland tourists are one of the key drivers in Hong Kong’s office leasing market and continue to support demand, according to JLL's latest Hong Kong Property Market Monitor released today.

Among new lettings, LVMH leased two floors of a lettable floor area of 47,200 sq ft at Two Taikoo Place in Quarry Bay, expanding from Dorset House in the same district.

The overall vacancy rate of Grade A offices stayed at 12.9% as at end-February. Central and Wanchai / Causeway Bay's vacancies rose marginally by 0.1 and 0.2 percentage points, respectively, while vacancy in Hong Kong East dropped by 0.6 percentage points. The overall market of Grade A offices recorded a negative net absorption of -14,600 sq ft in February.

Alex Barnes, Managing Director and Head of Office Leasing Advisory at JLL in Hong Kong, said: "FIREBS (Finance, Insurance, Real Estate and Business Services) continues to be the key driver of the city's office leasing market, accounting for 36.7% of total new lettings as of end 1Q24. Luxury brands have also been particularly active. They have benefited from the improvement in Hong Kong's retail market and are seizing the opportunity to negotiate favourable lease terms and upgrade their office spaces during the office market downturn.

Cathie Chung, Senior Director of Research at JLL, said: "Overall net effective rent of Grade A offices dropped further by 1.4% m-o-m in February. Among the major office submarkets, rents in Central and Hong Kong East dropped further by 2.4% and 0.6%, respectively, while Tsimshatsui's rental remained flat."

Source: JLL Research