Colliers: Central office market recovery outpaces the broader market, recording over 500,000 sq ft of net absorption in the first eight months

Colliers has published a research report titled "Reshaping Central: Why the Office Market Is Returning to the Core Business District," noting that the recovery pace of the Central office market is clearly ahead of the broader market, mainly benefiting from a rebound in the capital markets, expansion in the financial services sector, and continuously rising demand for premium office space. The report states that Central regained growth momentum in 2024, with net absorption totaling approximately 612,000 sq ft between 2024 and 2025, while the first eight months of this year alone recorded over 500,000 sq ft of new absorption. Meanwhile, Central's market performance has continued to outperform the overall Grade A office market. The vacancy rate fell from 15.1% in December 2024 to 9.9% in August this year, significantly below the 15.8% vacancy level across Hong Kong's Grade A office market. In terms of rent, Central rents rose 8.7% cumulatively in the first eight months of this year, while rents for top-tier Grade A offices increased 15.4%, far outpacing the 0.3% growth in the overall Grade A office market. Leasing performance at several landmark commercial buildings has been particularly outstanding, with Two IFC and One IFC nearly fully leased since June, while The Henderson's occupancy rate exceeded 90% in August. Another report, the "Hong Kong Office Tenant Survey 2026," shows that business confidence has returned to positive levels. 41% of respondents expect the business environment to improve over the next 12 months, while only 16% anticipate a downturn. Although 35% of tenants expect to increase headcount in the coming year, only 20% plan to expand their office space, with professional services and banking and finance most likely to expand, reflecting a gradually widening gap between companies' hiring intentions and office space demand. Many companies are absorbing growth needs within their existing offices by using space more efficiently and adjusting workplace strategies. Cost remains the most important consideration in leasing decisions. Whether choosing a commercial building or a district, rent level is the primary consideration, followed by building quality and transportation convenience. The survey also found that 68% of surveyed tenants plan to renew their leases in their existing office buildings, reflecting that market leasing activity remains dominated by renewals. Among major office submarkets, Tsim Sha Tsui and Kowloon East have the highest tenant retention intentions, with 88% and 87% of respondents respectively indicating a preference to remain in their original districts after their leases expire.