Dramatic Decline in Grade A Office Rentals

In a startling revelation, Grade A office rents in Hong Kong have dropped to HK$43.90 ($5.66) per square foot monthly, reflecting an astonishing 42.2% decrease from their peak in Q1 2019, as reported by Cushman & Wakefield.

Supply Surge Fuels Competition

The latest figures reveal a 2.5% quarterly drop, driven by a surge in citywide availability which jumped 19.2% recently. This increase can be attributed to 352,800 square feet of new office space brought to market by The Cendas, a recently completed complex in Kowloon East. "With around 3 million square feet of new supply anticipated in the next three quarters of 2025, the competitive leasing landscape is set to heat up," conveyed John Siu, managing director for Hong Kong at Cushman & Wakefield.

Anticipated Rental Pressures Ahead

Siu further predicts that overall average office rental prices will continue to face downward pressure, estimating a decline of 7 to 9% throughout 2025.

A Resilient Core: Greater Central Area Leads Leasing

Remarkably, Grade A tenants are occupying more space than they vacate for the sixth consecutive quarter, resulting in a net gain of 143,700 square feet leased. The Greater Central area, encompassing Central, Admiralty, and Sheung Wan, remains the most desirable location, accounting for 34% of the 790,200 square feet leased in the first quarter.

Rents on the Retreat Across Hong Kong

In the Greater Central region, rents declined by 3.2% to HK$77.20, while Prime Central fell more gently by 2.1% to HK$89.80. The Kowloon hotspot of Greater Tsim Sha Tsui saw the smallest rent drop at 0.7% to HK$42.30, while Wan Chai/Causeway Bay witnessed a 2% decrease to HK$46.00.

Banking Sector Driving New Activity

The banking and finance sectors are leading a wave of relocations and expansions, responsible for 46% of new leased space in Q1. Noteworthy deals included US hedge fund Point72 securing 49,500 square feet at Henderson Land’s The Henderson on Murray Road, making it the largest tenant, alongside existing major players like Christie’s and Carlyle Group.

High-Profile Leases Mark the Quarter

Other significant leases this quarter featured Ralph Lauren Sourcing taking 45,500 square feet at 83 King Lam Street in Cheung Sha Wan, and HSBC committing to 20,000 square feet at the International Commerce Centre in West Kowloon.