• Net absorption stood at -119,000 sq. ft. in Q3 2021, the eighth consecutive quarter of negative net absorption since the current market downcycle commenced in mid-2019. This downcycle is now the longest and deepest in the city’s history.
  • However, the magnitude of negative net absorption continued to moderate from previous quarters thanks to an uptick in new leasing volume.
  • Overall vacancy increased over the quarter, with pressure more prominent in Wan Chai/Causeway Bay and Hong Kong East. Vacancy fell in Kowloon East and was stable in Greater Central.
  • While still limited, leasing demand was broad based and from a range of industry sectors. Most new leases involved relocation, with several downsizing moves also observed. Chinese firms remained relatively quiet.
  • Stronger leasing momentum ensured the rental decline moderated in Q3 2021, with three of the city’s five major submarkets seeing rents fall by less than 1% q-o-q. Rents are expected to edge down further over the next 12 months.