Invesco moves to Jardine House amid falling rents
With prime office vacancy rates at record highs and rents continuing to slide in Central, tenants are making the most of the situation and moving to prestigious addresses.
US money manager Invesco is relocating its regional headquarters to Hongkong Land’s Jardine House.
The firm has signed a lease for 33,000 sq ft in the famed building, known for its distinctive round windows overlooking Victoria Harbour, from November 1.
“We believe Invesco is moving back into Central as part of a wider trend we are seeing in the market of a flight to quality,” said Neil Anderson, director and head of office for commercial property at Hongkong Land.
The firms did not provide any details about the lease.
“With Hong Kong as the heart of our regional operations, it’s rare to have this unique opportunity to move into one of the most iconic buildings in Central,” said Terry Pan, CEO for Greater China, Southeast Asia and Korea at Invesco.
The relocation trend in the Hong Kong office property market is likely to continue well into 2023, according to Cushman & Wakefield.
“Moving within the same district is always part of the trend of flight-to-quality moves,” said Rosanna Tang, Cushman & Wakefield’s head of research for Hong Kong.
“With rents now more attractive across the submarkets and landlords becoming more flexible, some of the tenants will definitely take this chance to look for premises in the more prime and central location and premises with better management or facilities.”
With some 2 million sq ft of new office space available in the city as of the end of the third quarter, the vacancy rate had risen to 16 per cent from 13.8 per cent in the second quarter, Tang said. Overall office rents declined by 2.3 per cent during the same period.
The move to Jardine House marks Invesco’s return to Hongkong Land’s Central portfolio. From 1998 to 2005, it occupied two floors in Three Exchange Square, also owned by the landlord. It then moved to Champion Tower, also in Central, occupying space comparable to its new lease in Jardine House.
Rents in Champion Tower and Jardine House are of a similar level, averaging around HK$88.20 per square foot at the former and HK$90 at the latter, analysts say.
As of the first half of the year, banks, asset managers and other financial services companies accounted for more than 40 per cent of Hongkong Land’s office tenant profile in Central, it said.
The current downturn in the city’s office property market has been described by CBRE as its “longest and deepest”.
It said a further 8.2 million sq ft of office space expected from 2022 to 2024 would drag rents down by as much as 5 per cent this year and 10 per cent next year.