Office Rent Increase 15%~

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  1. #1

    Office Rent Increase 15%~

    Has anyone renewed (or about to renew) their office rent. I just saw a 15% increase in the rent offer from the previous contract. It seems in line with the market, anyone get their renewal offer?


  2. #2

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    Quote Originally Posted by rolling smith:
    Has anyone renewed (or about to renew) their office rent. I just saw a 15% increase in the rent offer from the previous contract. It seems in line with the market, anyone get their renewal offer?
    Where is your office? How long ago was the old contract signed? What is the floor area? You are asking for a lot of generalisation, but I would think 15% is a low increase.

  3. #3

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    Indeed, our rent in IFC One went up 600% between 2003 and the renewal offer in 2006. We moved out.


  4. #4

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    Location and size do affect the rental fee. However, you have to consider if new offer is within your company budget and fit for your future headcounts.


  5. #5

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    15% is NOT too bad .. specially if you can get a good lease term ( 2 or 3 years) with some flexibility to terminate half way.

    I've heard rental increases of 40-100% in Central.

    Also, dreading having to move out of Cyberport next year as I have a feeling our rentals are going to go up significantly, even though the occupancy on our floor is about 50%


  6. #6

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    The ongoing expansion of corporate continued to underpin the demand in HK office market esp. Grade A buildings in Central eg. IFC. Therefore, the rental fee increases significantly


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    In at Harbour City ( WFC North Tower ) HKD13 in early . Renewal 2007 --- HKD39. When trying to negotiate ( Ha Ha Ha Ha Ha ! ) a more sensible rise Quote " We only want A list names here so we don't worry about you.

    The 3500 sq ft office ( we left 12 months ago ) is still empty !


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    Boris, I could be wrong in my logic here but bare with me...

    If these landlords want A grade tennants, wouldnt the A grade tennants prefer to buy their office space ? That way, better maintaining their long term overhead costs, with the extra advantage of an appreciating asset ? In the end, if they should ever decide to move into another location, upon selling their previous office,or renting it out themselves, using the equity to finance the next site, wouldnt they be in a financially much better position, than to be rail roaded into unreasonable rental increases, by HK landlords?

    I saw a mention of this topic on ATV pearl, it might have been on the news, that the biggest complaint with companies setting their opperations up in Hong Kong, is the way in which rents increase, and the high cost of providing accomodation for expat staff etc etc etc ....


  9. #9

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    Your logic is OK but buying commercial property is not always possible. Especially in Prime Areas.

    Also the problem with buying is that its essentially a Leasehold Transaction rather than Freehold ( hope you understand these terms ) as you would be buying a floor or 4 of a building rather than the whole building + the land on which it stands .

    You only have to look at Ocean Centre ( TST ). They have revamped it all but is essentially up for being returned to HK Gov as Part of the new Ocean Terminal Deal. Here, if you had bought then the Master Landowner could pull your investment from under you.

    FYI - I am not an commercial realtor but my mate is and I "learn his word " over time. AND I am sure some may pick a hole or two. However I think I got the basics correct.


  10. #10

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    Quote Originally Posted by Skyhook:
    Boris, I could be wrong in my logic here but bare with me...

    If these landlords want A grade tennants, wouldnt the A grade tennants prefer to buy their office space ? That way, better maintaining their long term overhead costs, with the extra advantage of an appreciating asset ? In the end, if they should ever decide to move into another location, upon selling their previous office,or renting it out themselves, using the equity to finance the next site, wouldnt they be in a financially much better position, than to be rail roaded into unreasonable rental increases, by HK landlords?

    I saw a mention of this topic on ATV pearl, it might have been on the news, that the biggest complaint with companies setting their opperations up in Hong Kong, is the way in which rents increase, and the high cost of providing accomodation for expat staff etc etc etc ....
    Great in theory, difficult in practice.
    Problem 1: Most large office buildings, that you want to move in to, are owned by one owner (a large company, trust, etc).
    Problem 2: Cost of purchasing. For certain companies it is not practical to tie up so much cash (or loan resources) in land and buildings when the funds can be used in a more cost effective manner within the business.
    Problem 3: Shareholder Value. For certain companies that are listed on stock exchange, having funds tied up in many land and buildings across the globe actually reduces shareholder value and therefore reduces the share price.

    There is no definite answer as to buy or rent. All that said, the Hong Kong market is definitely different and has its own challenges.

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