Central has been a magnet for businesses in search of high-quality space. One new building under construction is set to outshine them all, writes Fiona Ngan, Head of Office Services
Hong Kong’s office market – especially in the city’s key business district of Central – has always been the barometer for real-estate professionals, economists and other specialists when discussing prospects for the wider economy.
While Central has suffered declines in rent and occupancy in recent quarters, its appeal as a finance hub and prestige location has remained strong. The advent of high-specification office space in the coming years is set to reinforce this reputation.
What has seemed like one international upheaval after another has affected the city, just like in the rest of the world: a struggling economy, including rising inflation, the war between Russia and Ukraine and uncertainty over the future direction of Covid-19 and a lack of precision about when and, to what extent, borders will reopen.
In the first half of the year, businesses are likely to remain cautious about investment decisions, including how much they are willing to spend on leasing office space.
Businesses are likely to focus on saving money on their office leases in two ways for the rest of 2022: relocating, if that is their decision, to quality space, or making the best use of the space they are in, by consolidating their footprint. Property owners will be under pressure to approach negotiations in a flexible frame of mind if they want to ensure they have tenants in their buildings.
Central has been the business and financial heartbeat of Hong Kong for many decades. The rapid growth of domestic and international banks, industrial conglomerates and real-estate firms in the 1970s and 1980s only entrenched its position as they all sought exceptional corporate offices that reflected their status. These businesses brought in service providers such as law and accountancy firms, advertising agencies and public relations outfits in their wake.
While retailers and other consumer-facing businesses have moved out of Central, these employers continue to see the value of being in the centre of Hong Kong Island.
The ability to regenerate and stay fresh for existing and incoming tenants has also been core to Central’s success. The age range of buildings in the district goes from 6 to 60 years, with an average of just over 30. While net effective rents of all buildings, including Grade A property, have fallen since 2019, the decline has been much less since the end of 2020, showing a renewed confidence in the area. The monthly increases in vacancies are trending lower, too.
Recognising Central’s status, developers have sought to keep up with sentiment about the area, particularly the desire for high-quality space. The advent of new superior projects in the coming years is testament to their ability to respond to market changes. One of these, the Zaha Hadid Architects-designed The Henderson on Murray Road will be completed in 2023.
One can argue that few truly iconic buildings have appeared in Central in recent decades. The Bank of China Tower and IFC2 (International Financial Centre 2) may be exceptions. The Henderson is set to change this.
The vision behind the development of The Henderson is about redefining Grade A office standards and creating a long-term and sustainable partnership between the developer and tenants in the process.
It will be a 190-metre-tall super Grade-A office tower, with 36 storeys (including ground), five basement floors and a gross floor area of 465,000 sq. ft. when finished.
A sign of its impact before it has even opened came in July 2021 when Christies, the world-famous auction house, announced that it would become The Henderson’s anchor tenant in 2024.
The company praised the building’s vision, describing how its unique and forward-looking design complements the quality of the artwork, antiques and other objects the company sells around the world. It believes its new Asia-Pacific headquarters will become “a worldwide destination for collectors, with a signature profile on the Hong Kong skyline .”
A sign of the attention to detail that the developer is bringing to the new building is that visitors will be able to avail of private drop-off and VIP lift services. Few buildings in Central have the same, except for IFC and The Center.
The enthusiasm about the development of The Henderson from businesses and other prospective tenants points to the extra quality and edge that existing Central occupants are looking for from their current space.
Developers of buildings in Central have also kept pace with latest trends in other ways too.
Landmark and the International Financial Centre are ESG certified and comply with the Leadership in Energy and Environmental Design (LEED) standard, a voluntary environmental certification system the U.S. Green Building Council developed in 2000, and BEAM, an independent assessment of a building’s sustainability performance awarded by the Hong Kong Green Building Council.
The Henderson itself has already received Platinum Pre-certification in both WELL Building Standard (WELL) and LEED, further demonstrating how it’s in tune with occupiers’ needs .
Central’s enduring appeal over many decades, particularly for the financial industry, is based on the quality, convenience and flexibility of its highly prized Grade A property. With new space coming on stream in a few years, this reputation is set to persist.