Hong Kong office woes mount as most tenants shun expansion

HONG Kong office tenants from financial institutions to manufacturers are cautious about expanding their existing space, reflecting another headwind for the city’s troubled commercial real estate market.

In banking, finance and insurance, about half plan to maintain their office space in the next two years, while tenants in the manufacturing and shipping sectors are most likely to downsize due to weakened global demand and heightened trade friction, Colliers International Group found in a survey of 321 occupiers. Only the information technology sector had a majority of respondents expecting to expand office space.

Work from home is no longer the primary driver of businesses downsizing offices, according to the research. Instead, companies are motivated by managing costs, adapting to shrinking business demand and relocating out of Hong Kong. 

The survey results mean that landlords in districts housing the IT and financial industries should “approach and capture these occupiers early”, said Fiona Ngan, head of office services at Colliers Hong Kong. “Landlords should also be flexible when it comes to rental levels, considering that cost saving is the major concern in this competitive market.” BLOOMBERG