Report: Office Tenants in China Locking in Longer Leases

HONG KONG-Office vacancy in Hong Kong continued to rise through the first quarter of the year due to dwindled demand, according to Jones Lang LaSalle’s recently released Greater China Property Index for the first quarter of the year. The outbreak of SARS posed negative impact on the property market, according to the report, but “the impact on the office sector is indirect and relatively limited.”

In Hong Kong, the vacancy rate in Central rose to 11.2%, while that in Wanchai/Causeway Bay, Hong Kong East and Tsimshatsui was 7.9%, 7.8% and 9.2% respectively. The average net effective rent fell 12.3% in Central, 7.8% in Wanchai/Causeway Bay, 8.9% in Hong Kong East and 4.1% in Tsimshatsui with more attractive incentives, according to the report.

The good news was that a number of leasing negotiations that began in the previous year were concluded in the first quarter of 2003, particularly at superior-quality buildings that offer cost-effective space, and that there is an increasing incidence of long-term leases. “Tenants are increasingly opting for lease restructuring to secure longer-term business accommodation, capitalizing on the current attractive rentals and packages,” according to the report. “This should help lead to a less volatile office market.”