More Hong Kong office tenants seek longer rent-free periods from landlords: Colliers survey

South China Morning Post

4 days ago

Some nine out of 10
office tenants in Hong Kong are expecting longer rent-free periods from their landlords as more than a quarter of the city's companies intend to shrink their
real-estate footprint over the next 12 months, according to a survey from Colliers.
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The ratio was the highest since the property consultancy relaunched the annual survey in 2023. Last year, eight out of 10 respondents were seeking such concessions, according to data from the survey, which was released on Wednesday.
'Nowadays, landlords would be comfortable extending three to six months rent-free; that is pretty much standard,' said Chris Hui, Colliers' head of landlord representation for office services. 'Anything longer than that will obviously be subject to a lot of other factors, like how long is the lease and how large is the space.'
In rare cases, tenants could seek as much as 10 months rent-free, he added.
The survey also showed that an increasing number of office tenants – rising to 46 per cent this year from 25 per cent in 2024 – were looking at reducing their building management fees, which are charged on a monthly basis. Management fees cover various services including lift inspections, air conditioning maintenance and janitorial services.
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As office rents have fallen from a 2019 peak, tenants have sought lower management fees to ease their costs, the study showed. But Kathy Lee, head of the research and retail consultancy at Colliers, said landlords were not likely to budge.
'It's very difficult for landlords to give discounts on management fees because the management fee is always on a cost basis,' she said. 'They need a certain amount of staff to provide services, so there is not much room for them to lower the management fee.'