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CBRE: Co-working spaces at forefront as main driver of Hong Kong's office market

Co-working centers emerged as a key demand driver for Hong Kong's office space in 2017, and the sector is expected to become even more active in 2018, global property consultancy CBRE said during a media briefing Feb. 6.

After leasing a record 340,000 square feet of space in 2017, shared office spaces took up a combined total of 900,000 square feet in Hong Kong at the end of the same year. CBRE expects that figure to grow to about 1.2 million square feet in mid-2018 and expand even further by year-end.

Co-working space operators are expanding their footprint in the city from Hong Kong Island to Kowloon and the New Territories, and they usually rent at least one or two entire floors in a building, said Marcos Chan, CBRE's head of research for Hong Kong.

Co-working space companies can well afford to rent out entire floors, according to Chan, a reflection of just how solid demand for co-working spaces is in the market, he said.

"A majority of hot desks are [already] occupied in existing office spaces," according to Chan.

"Apart from startups, we have noticed that more and more multinational enterprises have become users of co-working spaces, particularly for short-term project venues," he added.

Meanwhile, in Central, Hong Kong's core business district, Chinese financial firms remained the most active renters, accounting for 49% of the total leasing activities in the area in 2017, according to data from CBRE.

"Central is expected to remain the preferred location for Chinese enterprises. Low vacancies, coupled with sustained demand for space from financial firms could potentially push up Central rents by a further 5%," said Alan Lok, executive director, advisory and transaction services for offices at CBRE.

But Lok added that rents are likely to remain broadly stable in other core submarkets in the city in 2018, while they will face pressure in the Kowloon East area due to increasing supply.