Grade A office rents plunged by 5.2% over Q1/2020, the worst quarterly performance since the 2008/2009 financial crisis, with the average vacancy rate rising to over 5%.

• Overall office rents have registered declines for three consecutive quarters, for the first time since the financial crisis in 2008/2009.
• Wanchai/Causeway Bay and Central saw the largest falls (-6.2%) among all office sub-markets.
• Decentralization is still popular but capital expenditure is a prime concern for relocators.
• The co-working industry will be tested hard by the COVID-19 outbreak given the need for social distancing.
• COVID-19 has piled pressure on the retail and hotel industries as retail sales and tourist arrivals have both slumped. Businesses in these industries can be expected to cut headcount and give back space.
• As stock markets have seen increasing volatility, the IPO pipeline looks farless certain and lay off s and surrenders can be expected from financial and professional services firms.
• The overall vacancy rate has nearly doubled in a year, rising from 2.6% in March 2019 to 5.2% in March 2020.
• Overall Grade A office rents are projected to fall by 20% in 2020, factoring in the extensive economic disruption of the COVID-19 outbreak.