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JLL joins Hong Kong office decentralization trend amid sky-high rents

Jones Lang LaSalle Inc. plans to relocate its entire Hong Kong office from the greater Central area to Quarry Bay, a district located on the east side of Hong Kong Island, in 2019, making it the latest multinational company joining the tide of decentralization amid surging rents in the central business district, two sources with knowledge of the matter told S&P Global Market Intelligence.

The global property consultancy is set to move out from the 38-story Pacific Place 3 tower in the Admiralty district, to the 7th and 8th floors of the new grade A One Taikoo Place office building, taking up 40,000 square feet of space at the tower. Both properties are owned by Swire Properties Ltd.

The U.S.-based company's departure from the central business district also makes it the first among global leading real estate services companies to head to the eastern side of Hong Kong Island.

CBRE Group Inc., Cushman & Wakefield and Savills (L&P) Ltd.'s offices are located in Central, while Colliers International Group Inc. operates out of Wan Chai.

A JLL spokesperson declined to comment on the moving plans.

Hong Kong houses the world's most expensive office market, with grade A office monthly rents in the greater Central area — including the Central, Sheung Wan and Admiralty districts — climbing another 2.4% to a record HK$134.30 per square foot in the first quarter from the previous quarter, according to Cushman & Wakefield.

The jump in rents in the core business area has pushed an increasing number of professional firms and global companies to decentralize and seek more cost-efficient locations. Even investment bank Goldman Sachs Group Inc. moved its back offices out of Central to Causeway Bay in the first quarter.

Financial services company Ernst & Young LLP and law firm Baker & McKenzie LLP also relocated their entire Hong Kong operations from the greater Central area to One Taikoo Place.

As a part of Swire Properties' Taikoo Place redevelopment project, the 48-story One Taikoo Place building is scheduled to be completed in the third quarter.

The building's monthly rental rate is between roughly HK$50 to HK$70 per square foot, less than half of rental costs in Central, the developer disclosed earlier in 2018.

Over 50% of the office space in One Taikoo Place has been pre-leased, Swire Properties said in February.