Hong Kong Landlord Shifts Upscale Office to Co-working Space
(Bloomberg) -- The biggest landlord in Hong Kong’s Central business district is opening its first flexible office space in one of its premium buildings to capture the demand for agile workplace leasing.
Hongkong Land Holdings Ltd. converted two floors in Edinburgh Tower to a 320-desk flexible workspace that’s opening its doors on Wednesday. Leasing term in the office ranges from as short as three months to three years.
Hongkong Land said the space mainly targets financial companies and professional services. An unnamed international financial institution has rented a suite, according to the landlord.
The co-working space helps the century-old landlord owned by Jardine Matheson Holdings Ltd. capitalize on tenants’ changing need for smaller offices and shorter leases. The company is joining Swire Properties Ltd. to become one of the few large landlords in Hong Kong to operate flexible office spaces.
Hongkong Land’s gross revenue from its office portfolio in the Central district dropped by 1.2% in 2020 from a year earlier, with vacancy rising to 6.3% at the end of last year from 2.9% in 2019.
The company now offers leasing space from as small as a work pod to as large as multiple floors of more than 100,000 square feet.
Hong Kong’s co-working industry has seen a setback during Covid-19 but has recovered gradually. Such floor space declined 195,000 square feet (18,116 square meters) since September, according to Knight Frank.
“The co-working space sector is actually performing better recently compared with last year,” said Martin Wong, head of research & consultancy for Greater China at Knight Frank LLP. “Many companies are taking the cautiously optimistic approach to expand, and co-working spaces provide them the flexibility in terms of capital costs and leasing terms.”
The flexible office industry is currently going through a consolidating phase in Hong Kong. While some operators like WeWork have closed centers in the past couple of years due to over-expansion, sizable companies are reaping the benefits of rising demand for agile office leasing amid an economic downturn. IWG Plc recently took a floor in east Kowloon to open a new center.
KKR & Co. and TIGA Investments acquired Hong Kong-based The Executive Centre last month, a vote of confidence from the investment companies on Asia’s flexible workplace providers.
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