Hong Kong may need 7 to 15 years to digest city’s glut of commercial space, experts say

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Hong Kong may need 7 to 15 years to digest city’s glut of commercial space, experts say

How do you solve a 15-million-square-foot empty office space problem in Hong Kong, a size larger than all the space in existing prime office buildings in the city’s main business district in Central?

This is the dilemma facing Hong Kong office landlords and asset managers, given the current vacancy rates and future supply of new buildings.

Given the long-term trend, it is likely to take at least seven years for the demand to catch up with the supply, according to property consultancy CBRE. Office landlords would thus struggle to fill the void, it added.

“By the end of this decade, the vacancy pressure is likely going to be very similar to what we are seeing in the market today,” said Marcos Chan, executive director and head of research at CBRE Hong Kong. “That is on an assumption that the market demand will be quite similar to what we used to have, before the market experienced a downturn a couple of years ago.”

The seven-year estimate appears to be on the optimistic side. If the current net annual demand for prime office space stagnates at 1 million square feet, it could take 15 years to fill these vacant offices with tenants, according to data cited by Edward Chan, director of S&P Global Ratings.

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