The ongoing U.S.-China trade conflict and local sociopolitical unrest continued to weigh on leasing demand in Q3 2019. Net absorption registered just 25,400 sq. ft. while vacancy climbed 0.3% points to 6.5%.
The weaker market sentiment ensured rents weakened across most submarkets. Overall office rents fell by 1.7% q-o-q, marking the deepest quarterly decline since Q1 2012. Greater Central was the worst performing district, with rents weakening by 2.9% q-o-q. Higher vacancy in Kowloon East also pulled down rents by 1.7% q-o-q.
Occupiers have largely adopted a wait-and-see attitude, with many firms even delaying decisions around cost-saving initiatives including decentralisation. New commitments involving relocations to decentralised areas fell by 86% q-o-q.
Chinese companies remained quiet. Agile space operators were relatively active, committing to 89,000 sq. ft. of additional space during the quarter.