Australian investment bank Macquarie Group is giving up a major portion of space it leases at One IFC, one of the most expensive office buildings in Hong Kong, as finance firms rethink their office needs in the city and look to save costs in an uncertain economy.
Macquarie will surrender 13 out of 16 units on the 20th floor before the end of September, according to Land Registry documents.
That space, amounting to about 17,000 square feet, had been sublet to The Executive Centre since 2015, which the co-working space operator will lease directly from the landlord from October, people familiar with the matter told the Post.
None of the Sydney-based bank’s 500 employees use the space that is being given up, they added.
Property consultancy Savills said in its latest report that more space surrenders can be expected from financial and professional services firms as the Covid-19 pandemic weighs on businesses. “Covid-19 has caused extensive disruption to global production and trading activity and the solvency of some corporates is expected to be tested under these uncertain conditions with implications for the local office market,” Savills said.
In March, Nomura Holdings, Japan’s biggest investment bank and brokerage, decided to downsize its space in the neighbouring Two IFC when a new lease starts next year.
Office vacancy rates in Hong Kong reached 7.3 per cent in the first quarter, a 10-year high, according to Colliers International.
Hong Kong’s economy shrank 8.9 per cent last quarter from a year earlier, the worst on record, because of the serious and sustained impact of the coronavirus pandemic. And rising tensions between the United States and China over Beijing’s could further dampen business sentiment. Last Saturday, Trump said that he would revoke Hong Kong’s special customs status, in response to China’s plan to introduce a national security law for the city.
According to documents lodged with the Land Registry, Macquarie had initially leased six floors – 18 to 23 – in One IFC in June 2008, but gave up two floors – 19 and 21 – when it renewed the lease in 2014. The rent for these four floors then stood at HK$9.42 million (US$1.2 million) per month. Last October, the bank extended the lease for an undisclosed rent.
Data from CBRE shows that the average rents in May for One IFC and Two IFC stood at HK$175 and HK$185 per sq ft a month, respectively.
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