Gao Li: Hong Kong office tenants tend to be cautious, with 31% of respondents holding a negative view of their business prospects in the next year.

The "Hong Kong Office Tenant Survey 2025" released by Colliers International shows that in the continued fluctuating global economic environment, Hong Kong office tenants remain cautious and actively seek strategies to "do more with less" to cope with challenges. 31% of respondents have a negative outlook on business prospects in the next 12 months, exceeding the 28% with a positive outlook for the first time. However, 41% of respondents still hold a neutral attitude, reflecting an overall stable but cautious market. The survey shows that 55% of tenants plan to maintain their current office space, 27% intend to reduce it, and 18% are considering expansion. Among tenants intending to reduce office space, 81% cite cost optimization as the main reason, followed by a decrease in business demand (60%). On the other hand, expansion is mainly driven by Hong Kong business growth (68%) and insufficient existing space (51%). The Technology, Media, and Telecommunications (TMT) industry and the Insurance industry are the most inclined to expand, with 35% and 36% of respondents respectively planning to increase office space. The Banking and Financial industry is relatively stable, while the Shipping and Logistics and Procurement and Trade industries show a stronger tendency to reduce, reflecting different strategies for coping with uncertain market prospects in each industry. Vicky Wong, Director of Corporate Client Services at Colliers Hong Kong, said: "In a market where companies are generally focused on cost control, tenants are more inclined to seek flexible and cost-effective office location strategies. The active expansion of the TMT and Insurance industries reflects their confidence and resilience in the market, showing that while the market is cautious, it is still actively adjusting and preparing for future growth." The survey indicates that rent (92%) remains the primary factor for tenants in choosing office space, followed by building quality (72%) and floor area size (37%) - reflecting tenants' emphasis on building quality. While rent and building quality dominate location decisions, Environmental, Social, and Governance (ESG) factors are gradually gaining importance, especially for large companies. Overall, 12% of respondents said ESG certification is one of the location considerations, with this proportion rising to 41% among flagship tenants, reflecting a growing expectation among large companies for sustainable development and corporate social responsibility. Tenants in Central/Admiralty (91%) and Kowloon East (83%) show a high level of loyalty to their areas. In contrast, tenants in Sheung Wan (57%) and Hong Kong East (73%) are more inclined to relocate, reflecting some companies' desire to enhance their corporate image by moving to core areas and some opting for emerging areas in pursuit of better value for money. Kelvin Lam, Director of Commercial Property Services at Colliers, said: "Core business districts are still attractive to tenants looking to enhance their corporate image. With rental levels becoming more competitive, we have observed more companies reconsidering moving back to core areas to align with their brand positioning and transportation convenience." Approximately 64% of tenants plan to renew their current office space, with 44% not intending to change their rental area. Whether renewing or relocating, rent remains the decisive factor, with many tenants citing attractive rental plans as their main consideration. 88% of respondents expect rent-free periods, 49% hope for capital expenditure subsidies, and another 46% expect management fee discounts, which have significantly increased from 25% in 2024, becoming more common expectations than flexible leases. Kenneth Wong, Director of Commercial Property Services at Colliers in Kowloon, said: "Cost is still the most concerning factor for tenants, and the Kowloon area has advantages in providing competitive rents and quality space. As tenants' expectations for lease flexibility and leasing incentives rise, areas such as Kowloon East are meeting these needs by providing competitive leasing terms while also offering convenient transportation and functional amenities."