State of the Occupier - Hong Kong: Open for Business

Government restrictions are slowly easing with large corporates progressively returning to full occupancy. Temperature scanning has been implemented in most office buildings, gyms and restaurants. Public facilities that were closed are now open as of 8 May. The government has also announced financial assistance for businesses to apply for a maximum contribution of 50% towards employee wages for a period of 6 months (capped at a HK$9,000 per employee). There are also plans in place for selected students to return to school and for travel restrictions to be lifted between neighboring cities to allow for business travel.

We’ve seen numerous cases of tenants asking for assistance to achieve short-term rental relief. These requests are being approved by landlords for those buildings that cater to retail companies, but not yet for pure office portfolios or tenants. We’ve seen an increase in sublease disposition offers, which may turn into office closures upon lease expiry. Many occupiers are reaching out for help downsizing their space, but tenants still prefer fitted spaces due to the high cost to fit-out a bare-shell space. Tenants are seeking to right size via in-house relocation where possible.

OCCUPIERS?
Occupiers facing a looming lease expiry are seeking short-term solutions in serviced offices and co-working operators as they await how the situation develops. They are increasing looking to sublet or surrender space, with some tenants simply going dark and walking away from leases.


LANDLORDS?
Faced with an increasing amount of vacant space, certain landlords are now willing to accept lower rents with a view to filling up vacant space in the short term. 


DEVELOPERS / INVESTORS?
Developers with existing ongoing developments are now willing to accept lower than expected / budgeted rents for vacant space due to the lack of enquiries / inspections based on their ‘higher asking rents’. Investors now enquiring about the availability of good opportunities in the market.

Major occupiers may have the opportunity to take advantage of weak market sentiment and achieve better deals, including additional landlord fit-out expenditures from those new developments or landlords with higher vacancy. Occupiers may have to accept less desirable locations and or less prestigious addresses. Large spaces from co-working operators will soon be reflected in the vacancy rate for various districts- that would put further downward pressure on office rents.

☎️ Contact us.