Response slow in development due to office supply surplus
The new office tower at 26 Nathan Road in Tsim Sha Tsui, formerly known as Titus Square, has received slow leasing response due to the economic climate and office oversupply, estate agents say.
The 28-storey property, beside the Sheraton Hong Kong Hotel, is owned by Vast Earn Property which bought it for $1.66 billion early this year from Stelux Holdings.
Agents said the landlord had cut rents to attract tenants.
When launched for lease in April, asking rental started from $27 per square foot on the gross area a month.
Agents said asking rents had been cut to between $18 and $24 per sq ft with a rent-free period of about two months.
The 26 Nathan Road is a redevelopment on the site of Ambassador Hotel.
The property has about 120,000 sq ft of grade-A office space above a 60,000 sq ft retail podium. Subdivided office units are as small as 750 sq ft.
A whole floor measures about 6,600 sq ft.
To date, three or four floors have been leased at $18 to $21 per sq ft, they said.
Midland Realty assistant sales manager in New Mandarin Plaza branch, Terry Wong, said the 26 Nathan Road was the only new office building completed this year in that area of Tsim Sha Tsui.
He said there was a limited number of large office space-users looking for premises in that area and the office-leasing market was very competitive due to overall rising supply.
Mr Wong said at the current asking rents, it would be difficult for Vast Earn to draw tenants to fill the building quickly.
He forecast that the landlord might need to adjust rents downwards slightly or offer longer rent-free period to attract companies to move in.
Agents said office spaces in Tsim Sha Tsui were offered at competitive rents with rates at Tsim Sha Tsui East down to $12 to $16 per sq ft.
Rents in Lippo Sun Plaza and New World Centre were from $16 to $24 per sq ft, they said.
Centaline Property Agency senior district sales manager in Tsim Sha Tsui, Cheng Kai-biu, said the 26 Nathan Road would attract some companies but leasing for large space-users was slow.
The economic recession and the increase in office supply were dampening demand and companies' relocating interest, he said.
After all, tenants had a lot of choices on the market in terms of office accommodation, he said.
