Office: Demand Remained Stable Despite Protests

January 19, 2015

CBRE today launches the Hong Kong Office Q4 2014 MarketView. For more information or to arrange interview with one of our experts please contact karen.ho@cbre.com.hk / 2820 8108.

Rhodri James, Executive Director, Office Services, CBRE Hong Kong expects the sluggish global economic environment will lead to multinationals continuing to adopt a cautious approach to expansion in 2015. “While some large corporations are still looking for cost-effective office space in decentralized locations, Chinese financial institutions will remain the key driver of demand for premium, Grade A office space in Central. The rental gap between the core districts and the decentralized submarkets will continue to narrow with the exception of Central A1 buildings which will continue to see strong rental growth. Despite the anticipated lack of strong demand, low vacancy should prevent rents from falling this year and support rental growth in certain submarkets. Overall rents are projected to record a modest increase of 5% in 2015.”

CBRE Outlook for Q1 2015

Overall rents will remain stable. In Central, high occupancy and limited future vacancy of A1 buildings will encourage landlords to adopt a more aggressive stance towards asking rents
Relocation will become increasingly more challenging as low vacancy leaves large-space users with fewer relocation options
Some cost conscious occupiers will find it increasingly difficult to secure cheaper options in Kowloon, leading to some spill-over demand for revitalized industrial buildings
Chinese financial institutions will remain the key driver of demand for prime space in the CBD
An increase in the volume of new completions is expected this year but mainly concentrated in decentralized locations. Some new spaces have already been presold to owner-occupiers or investors, reducing options suitable for large MNCs

CBRE Highlights for Q4 2014

Central and Sheung Wan continued to see steady leasing activity in Q4 2014, with several financial sector firms taking space
Net absorption in the overall market was NFA of 83,000 sq. ft., bringing the full year figure to a positive 453,000 sq. ft., in contrast to the negative 392,000 sq. ft. in 2013
City-wide vacancy edged up by 0.2 percentage points to 3.6% following the completion of The Octagon, providing 248,000 sq. ft. net of new space in Tsuen Wan
Overall rents increased by 0.6% q-o-q, as rents improved both on Hong Kong Island and Kowloon side
The Occupy Central protests had no significant impact on business operations and office leasing demand, although accessibility to some buildings in and around Admiralty was hampered

	Overall (Q4 2014)	Overall (Q3 2014)	Central (Q4 2014)	Central (Q3 2014)
Vacancy	3.6%	3.3%	4.4%	3.9%
Rents (Net effective) per sq. ft.	HK$59.5	HK$59.1	HK$99.3	HK$98.5

To view full Hong Kong Office MarketView Q4 2014, click here.

Disclaimer:

Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

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