Hong Kong Island office rents return to growth as leasing momentum builds
Accelerating leasing and no major Grade A completions expected in 2026 signal tightening supply-demand conditions that could reduce vacancies and support gradual rental recovery.
Hong Kong Island office rents rose 5.5% year-on-year in 1H 2026, their first annual increase since 2H 2021, as net absorption reached 861,000 sq ft.
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Office rents rose 5.5% in the first half of 2026.
In a recent report, Knight Frank says Hong Kong's office market recovery strengthened in the first half of 2026, with Hong Kong Island recording its first annual rental growth since the second half of 2021 as leasing activity accelerated.
According to Knight Frank, average office rents on Hong Kong Island rose 5.5% year-on-year in 1H 2026, while net absorption reached 861,000 sq ft, up from 594,000 sq ft in the second half of 2025. The agency said the rebound was led by Overall Central, where rents climbed 10.8% year-on-year, outperforming all other office submarkets.
Knight Frank attributed much of the leasing momentum to the co-working sector, which completed 12 major leasing transactions during the period. These included seven deals between 10,000 sq ft and 20,000 sq ft and three exceeding 20,000 sq ft, together accounting for more than 200,000 sq ft of leased office space. Demand was evenly split between Grade A and Grade B buildings, reflecting differing location preferences and operational requirements. Central and Causeway Bay captured 46% and 40% respectively of total co-working expansion, supported by growing demand from start-ups and mainland Chinese firms seeking flexible office solutions.
In Kowloon, Knight Frank said landlords in Kowloon East continued to offer flexible lease renewal terms to retain occupiers, resulting in a modest increase in renewals during the second quarter. Relocation activity among both large corporates and SMEs eased, with most moves focused on improving space efficiency, consolidating operations and reducing occupancy costs. Floor plate size, total rental expenditure and fit-out costs remained the key factors influencing relocation decisions.
West Kowloon and Kowloon Central remained the most active leasing submarkets, driven by strong demand for premium office space. At The Gateway, only a limited number of whole-floor vacancies remain, while harbour-view offices are close to full occupancy, highlighting continued demand for high-quality space in prime locations.
While leasing conditions continued to differ across Kowloon's submarkets, Knight Frank said overall office rents have largely stabilised. With no major Grade A office completions expected during 2026, the consultancy expects vacancy rates to decline further and take-up to improve, reinforcing the market's bottoming-out phase and supporting a gradual recovery.