Hong Kong landlord shifts upscale office to co-working space

Hong Kong

THE biggest landlord in Hong Kong's Central business district is opening its first flexible office space in one of its premium buildings to capture the demand for agile workplace leasing.

Hongkong Land Holdings converted two floors in Edinburgh Tower to a 320-desk flexible workspace that is opening its doors on Wednesday. Leasing term in the office ranges from as short as three months to three years.

Hongkong Land said the space mainly targets financial companies and professional services.

An unnamed international financial institution has rented a suite, said the landlord.

The co-working space helps the century-old landlord owned by Jardine Matheson Holdings capitalise on tenants' changing need for smaller offices and shorter leases.

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The company is joining Swire Properties to become one of the few large landlords in Hong Kong to operate flexible office spaces.

Hongkong Land's gross revenue from its office portfolio in the Central district dropped by 1.2 per cent in 2020 from a year earlier, with vacancy rising to 6.3 per cent at the end of last year from 2.9 per cent in 2019.

The company now offers leasing space from as small as a work pod to as large as multiple floors of more than 100,000 square feet (sq ft).

Hong Kong's co-working industry has seen a setback during Covid-19 but has recovered gradually.

Such floor space declined 195,000 sq ft since September, said Knight Frank.

"The co-working space sector is actually performing better recently compared with last year," said Martin Wong, head of research and consultancy for Greater China at Knight Frank.

"Many companies are taking the cautiously optimistic approach to expand, and co-working spaces provide them with the flexibility in terms of capital costs and leasing terms."

The flexible office industry is currently going through a consolidating phase in Hong Kong.

While some operators such as WeWork have closed centres in the past couple of years due to over-expansion, sizeable companies are reaping the benefits of rising demand for agile office leasing amid an economic downturn.

IWG recently took a floor in east Kowloon to open a new centre.

KKR & Co and TIGA Investments acquired Hong Kong-based The Executive Centre last month - a vote of confidence from the investment companies on Asia's flexible workplace providers. BLOOMBERG