OFFICE
Growing pool of small to medium-sized companies moving their entire operations to co-working space.

Hong Kong Island

In February, overall Grade A office rents on Hong Kong Island adjusted to HK$77.5 per sq ft, falling 14.8% on a YoY basis. Some landlords in Central reviewed their portfolios and adjusted their leasing strategy after Chinese New Year. Smaller landlords under greater vacancy pressure have cut rents more aggressively, offering generous incentives to attract
good covenant tenants. However, some landlords of prime buildings that have successfully leased vacant space as a result of rental adjustments and concessions have begun tightening up their leasing strategy.

As flexible working arrangements have become prevalent in the wake of the COVID-19 pandemic, more tenants are taking the opportunity to explore viable alternatives to renting traditional office space. As a result, there is increasing demand for co-working space from small to medium-sized companies, especially those with 50 to 100 staff. Some
companies are reportedly considering relocating their entire operations to coworking space.

Looking ahead, as cost-optimisation and high flexibility are set to become major concerns of businesses in the postpandemic era, demand for co-working space will undoubtedly continue to grow.