Cushman & Wakefield : Office Availability Rate to Rise and Rent to Drop Further throughout 2021

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Retail Market Rebounded with 30% Sales Increment in February


Highlights of Office Market:

  • Citywide rents down 24.4% from the last peak in 1Q 2019
  • Negative net absorption of 900,000 sq. ft.
  • Availability at record high of 14% since 2Q 2004
  • Forecast rents to decline further till the end of 2022

Highlights of Retail Market:

  • Local demand drove retail sales up by 30% Y-o-Y in February
  • Short-term leases improved high street occupancy
  • Rent adjustment will continue throughout 1H 2021
  • Forecast gradual recovery mainly driven by F&B sectors

HONG KONG SAR – Media OutReach – 12 April 2021 – While office and retail rental performance went in the same downward direction, retail sales picked up gradually from the already-bottomed baseline since 4Q 2020. Retail sales rose by 30% in February 2021, whereas office rental was driven down further by 17.6% in 1Q 2021 Y-o-Y as a result of the downsizing trend since 2020. Yet, the market has been active with large occupiers shopping around for more cost-effective office space as alternatives.

Table 1 – Hong Kong Office Rents Comparison

Table 2 – Rental Forecast till End of 2022

Table 3 – Retail Sales Comparison

Table 4 – Retail Rental Value Comparison

Source: Cushman & Wakefield Research

Office Market – Post-Pandemic Downsizing Trend Will Persist throughout 2021

With larger occupiers, mainly MNCs, surrendering office space throughout the pandemic period, overall office space availability rate reached 14% in 1Q 2021, a record-breaking high since 2Q 2004. Citywide rents down 24.4% from the last peak in Q1 2019, and Greater Central rental dropped by 29.1% from the last peak values recorded in 1Q 2019 (Table 1).

Negative net absorption in 1Q was up to a record high of 900,000 sq. ft. With volume of available space on the rise but demand currently mild and slow in picking up the pace, decline in overall office rental was the inevitable result. Rental decrease was the most severe in the Greater Central submarket with -21.4% Y-o-Y. Hong Kong South rental value dropped by 10.3% Y-o-Y in 1Q 2021, the lowest percentage drop among all submarkets.

Mr. Keith Hemshall, Cushman & Wakefield’s Executive Director & Head of Office Services, Hong Kong, commented, “Although we see positive sentiment in Hong Kong building up gradually with vaccination in place, occupiers remained cautious and are still in the process of shopping for more cost-effective office options with favourable lease terms. We expect this downsizing process will continue for a few more quarters, thus driving availability rate further upward till end of 2022. Yet, we are glad that we rarely come across occupiers who are forfeiting the Hong Kong market for good. They are mainly driven by more stringent cost-cut measures as a result of the pandemic turmoil.”

Office space being surrendered amounted to 724,000 sq. ft. in Q1 2021 was mainly come from MNCs across the sectors of Consumer Products, Manufacturing & Sourcing (34%), Banking and Finance (23%) and Professional Services & Real Estate (21%). Three notable cases include VF Regional, DBS and IPG Mediabrands.

Mr. John Siu, Cushman & Wakefield’s Managing Director, Hong Kong, commented, “With record high negative net absorption, any new supply coming up in the market is likely to drive further rental decline. The nine projects in three non-core submarkets totalling 4.2 million sq. ft. due for completion in 2022 will probably attract pre-commitments later this year from large occupiers who are looking for cost effective alternatives for consolidation. Looking forward, we expect office rents will continue to adjust downward until the end of 2022 (Table 2).”

Retail Market – Gradual Recovery in 2021 Driven by Local Demand

With minimal leisure and business travellers’ influx in 1Q 2021, local retail consumption has facilitated mild sales recovery. 30% Y-o-Y retail sales increment was recorded in February 2021 mainly driven by Jewellery & Watches (114.1%) and Fashion & Accessories (89.4%) sectors. The encouraging growth was mainly driven by low-baseline effect, the festive season in February and the increase in purchasing services for overseas’ buyers (Table 3).

Retail space occupancy level also gradually improved in 1Q with landlords taking up more short-term leases after an extended vacant period. Yet, these short-term leases did not help halt rental decline. Rent declined by 35% Y-o-Y in Causeway Bay and 30.5% Y-o-Y in Central in 1Q 2021. All key retail districts experienced double digit rental drop as compared to the same period last year (Table 4).

Mr. Kevin Lam, Cushman & Wakefield’s Executive Director, Head of Retail Services, Hong Kong, said, “Despite the prolonged pandemic challenges, the new F&B food hall trend took off nicely and attracted quite some attention over the past six months. Local sentiment has become more positive with vaccination in place and strategic promotions by shopping mall landlords and retailers. Looking ahead, we expect retail rental will stabilize for the rest of the year and have a mild increment thereafter.”

Online purchase has become an acute trend during the pandemic with 91.3% and 56.5% yearly growth in January and February respectively. Online retail sales of HKD4.17 billion was recorded in the first two months of 1Q 2021.

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Photo Caption

From Left to Right: Mr Kevin Lam, Cushman & Wakefield’s Executive Director, Head of Retail Services, Hong Kong, Mr John Siu, Cushman & Wakefield’s Managing Director, Hong Kong and Mr Keith Hemshall, Cushman & Wakefield’s Executive Director, Head of Office Services, Hong Kong

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 50,000 employees in over 400 offices and 60 countries. Across Greater China, 22 offices are servicing the local market. The company won four of the top awards in the Euromoney Survey 2017, 2018 and 2020 in the categories of Overall, Agency Letting/Sales, Valuation and Research in China. In 2020, the firm had revenue of $7.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit or follow us on LinkedIn (