bably a good time to move into Central district to take the

advantage of the attractive rents.

Karen Chan

A

S RENTS tumble amid a glut of office space, competition among

landlords in ritzy Central business district has gone into overdrive.

Competition is particularly keen on new structures like Cheung Kong

Center and One International Finance Centre.

Industry watchers say it has become common these days for landlords to

offer six to nine months of free rents on top of the competitive rate

to draw clients.

Given the millions of square feet of grade-A office space available

for lease, they have no choice, a property agent said.

A property analyst with a European house says office rents could come

off by another 10 per cent this year, but in large buildings like

Cheung Kong Center or One International Finance Centre, rents are

starting to stabilise as landlords have achieved a certain level of

occupancy.

"Landlords (with) occupancy rates of over 50 per cent in their new

developments will be less inclined to offer the same lease-terms

compared with the time when they first offered their properties for

lease."

He said the achievable office rent in Central is around $40 to $45 per

sq ft, and it was justified to relocate one's office with a more than

$10 per sq ft difference.

Property agents say now is probably a good time to move into Central

district to take the advantage of the attractive rents.

In the first quarter, average office rentals tumbled between 9.6 per

cent and 20.6 per cent from levels in the last quarter of the previous

year as supply jumped massively.

The plunge came as some 9.4 million sq ft of new office space came

onto the market last year and 5.6 million will be added this year and

next.

Figures provided by Vigers Hong Kong show that average net effective

monthly rental in Central has reached reached $35.5 per sq ft in the

first quarter.

With location probably the single most important consideration for any

business, there could be no better time than now to set up office in

the heart of commerce _ Central.

Cheung Kong Center, which towers 62 storeys and is located at the

heart of Central, counts among its tenants the most powerful business

institutions in the world, including the Bank of China Tower, Hongkong

Bank headquarters and Citibank Plaza.

Cheung Kong Center, designed by world-renowned architect Cesar Pelli,

can be considered as much a work of art as an efficient working

environment.

Hutchison Whampoa, the leasing agent for Cheung Kong Center, is not

disclosing the average rent, but analysts estimate the average

effective rent at $25 to $30 per sq ft considering the long rent-free

period it has offered tenants. It is way below the $50 to $55 per sq

ft target set by senior management before the launch.

Real estate agents say the occupancy rate in newly completed grade-A

office buildings stands at 65 per cent, and another 10 to 15 per cent

of available floor space is under negotiation.

The agents note that occupancy rates in older buildings in both

Central and fringe districts have fallen for some time now as tenants

move to newly completed grade-A buildings.

This has forced landlords of such property to be more flexible and

competitive in offering rents and incentives to secure tenants. But

the new buildings are getting the best deals.

Cheung Kong Center, for instance, has signed investment bank Goldman

Sachs (Asia) for a 12-year lease on eight-and-a-half office floors,

becoming the leading tenant late last year. Hutchison is believed to

have offered up to two- and-a-half years rent-free period along with

reasonable rent as sweeteners, but the two groups have remained

silent.

Cheung Kong Center is close to everything _ all the major financial

institutions, multinational corporations, banks, lawyers, stockbrokers

and Hong Kong's top five-star hotels.

Most importantly, the location puts the tenant at the centre of all

people he has to do business with.

A fung shui master says the development not only has a central

location; the site also has good fortune. At the foot of the Peak and

in front of Victoria Harbour, Cheung Kong Center lies harmoniously at

the heart of the financial and business centre.

Perfectly square in shape, the centre stands for stability, endurance

and long-lasting prosperity _ the perfect ground for any business, the

master said.

In addition, nothing inspires people more than an amazing view.

Nothing empowers employees more than standing high above the whole of

Hong Kong. From Cheung Kong Center, large glass windows from floor to

ceiling give occupants a 360-degree panorama of Victoria Harbour,

Kowloon Peninsula and the Peak.

Inside the building, floor plates are highly efficient with large open

spaces and high ceilings. Offices are all designed with the latest

raised floor system.

Tenants can design a wide range of efficient layouts and redesign or

alter an entire office plan at very little expense. At 20,000 sq ft to

22,000 sq ft lettable area, they are some of the largest column-free

floors in central Hong Kong.

Air-conditioning is supplied through raised floors.

Cheung Kong Center's most powerful business weapon is

telecommunications. Every office, every desk is plugged to the world

via the most advanced fibre-optic network.

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