Zero Rent on Office Space?
DEC 2023 | LAST UPDATED
SNAPSHOT
Finding office space for rent? Secure up to 5 months zero rent on your next office space. That's right, it’s possible, with some landlords providing further incentives such as fit out subsidies, if you know where to look.
Renting office space in Hong Kong (albeit in the pandemic) remains one of the single largest cost in running a business.
MARKET INCENTIVES (2021)*
Yet the most attractive office spaces for rent are often short-lived, difficult to source, analyse and execute.
So where can tenants look to gain a real advantage when leasing office space in Hong Kong?
Given the high occupancy cost of Hong Kong, the most common barriers businesses face is in the inefficient process of finding the ideal office space for rent to match their exact needs coupled with expert lease negotiations to maximise value for both during and after the lease expiry date.
TOTAL OCCUPANCY COST
THE PROBLEM WITH FINDING THE IDEAL OFFICE
Often, businesses may involve working with one or a few traditional office brokers (i.e. JLL, CBRE, Savills) on search or browsing office listing sites online (i.e. Prime Office, Hong Kong Offices, Spacious).
While traditional methods can lack full opportunistic market coverage, online listing sites can lack institutional expertise. And assuming you find the ideal office online and undergo negotiations, the question then becomes how to secure the best market rental or how to ensure that the correct negotiation strategy is being implemented over the next 3 years and beyond?
Whether finding or negotiating commercial property leases, on behalf of both corporates or small businesses, market coverage and institutional expertise is critical, as missed opportunities or mistakes along the way can be costly, make or break office lease negotiations, and lead to both time and money being wasted in the long run.
THE SOLUTION?
The simple answer is to utilise data and technology to allow for the ideal office to find you. That’s right, let the ideal office space find you, in real-time.
Upon submitting your office brief to SAVVI, proprietary algorithms perform matching making on millions of square feet of off-market opportunities and the best market deals. Your business can take advantage of full market coverage, whilst also having access to scalable institutional grade expertise to manage and negotiate your office set up from start to move-in.
OFFICE SPACE FOR RENT IN HONG KONG
The Hong Kong office market continues to be one of the world’s most expensive market, around 60% costlier than the next two markets (New York - Midtown and London - West End). Years of demand from Mainland Chinese firms, alongside ongoing supply shortages, has held up premium values across the key business districts.
Indeed, with the overall impact of COVID-19, office rentals have progressively been priced into the rental market. Occupiers who are within a suitable transaction window from now until the end of 2023 or early 2024 can yield real dividends.
Moreover, while Hong Kong has traditionally been a landlord’s market, “SAVVI” tenants can secure a real advantage by accessing off-market opportunities that can generate massive potential savings in both up and down markets.
OFF-MARKET OFFICE sPACE FOR RENT
Off-market opportunities and “shadow” space provide more market fluidity by allowing tenants to monitor opportunities that may be coming available within the transaction window which would not show up on any standard open market vacancy listing. The breadth of options facilitate demand and supply, whilst minimising bidding wars in tight markets through private match making.
HOW DOES IT WORK?
Whilst the land registry system in Hong Kong is well-developed and accessible to the public, transaction records and lease expiry dates are generally available for large occupiers with long leases, as 3 year leases do not need to be registered. Since the majority of small to medium size occupiers sign 3 year leases in Hong Kong, a comprehensive tracking of tenant’s movements is key to create value in a market where data is king.
OFF-MARKET CENTRAL OFFICE SPACE FOR RENT
Hong Kong’s Grade A Central CBD office market totals approximately 20 million sq ft of which only 6% is vacant and open market. Off-market / shadow stock provides tenants access and leverage to upcoming and fitted spaces that can generate massive savings together with a much broader market for cost arbitrage.
Learn more about Central offices for rent here.
ARE THERE OTHER IMMEDIATE SAVINGS FOR OUR BUSINESS?
Yes, data driven match making is just the start, on managing your office rental assignment, there are also a number of immediate solutions to reduce your capital expenditure (CAPEX) significantly to justify setting up a new office or when considering a renewal vs office relocation. Let’s recap just a couple of these below.
1. MASSIVE SAVINGS ON OFFICE FIT-OUT WITH SAVVI
Through SAVVI's Tenant's Network, finding your ideal office will start by accessing thousands of off-market and upcoming opportunities so that you may save hundreds of thousands or millions on fit-out cost alone.
CAPEX on fit-out is often the top cost factor faced by companies when considering a renewal vs relocation assignment in Hong Kong. By removing this cost factor, companies are in a far better position to align their true business operation needs, whether this be expansion, downsize or simply upgrading or reducing overall real estate expenditure.
For companies in cost avoidance mode, often, the time and cost considerations of fitting-out a new office (in order to capitalise on an improved rental opportunity) can alone spoil an office relocation opportunity, especially where any rental cost savings are off-set by moving costs.
The holy grail is to be able to capture undervalued rental opportunities that are also off-market (avoiding bidding wars), upcoming (not open market), and fitted opportunities (massive cost savings) that match your projected business needs over the next 3 years in Hong Kong.
Fit-out costs are typically quoted and assessed on the net square footage of the space and for Class A or Prime buildings normally range from HKD 600–1200 per square foot, including construction, furniture, wiring, design fees, etc.
To learn more about mitigating fit-out cost, see our guide here.
2. MASSIVE SAVINGS ON OFFICE REINSTATEMENT WITH SAVVI
Another reason companies tend to renew their lease, sometimes reluctantly, is the overall costs involved with relocation. Aside from fit-out costs above, the lease agreement in Hong Kong generally requires tenants to restore the property to its original handover condition, before the expiration of the tenancy at their own cost. Reinstatement costsfor Class A or Prime buildings normally range from HKD 150–300 per square foot net.
Through listing your company's office space early with SAVVI, you have access to thousands of prospective tenant's who may take over your office space in 'as is' condition, saving them both design & fit out costs, and releasing you from your reinstatement liabilities.
For a 5,000 square foot net office, this translates to an average of HKD 1,000,000 in potential and immediate reinstatement savings.
Learn more about achieving zero reinstatement cost here.
PARTNER WITH SAVVI OFFICE LEASING
SAVVI’s full market coverage together with our proprietary data & AI driven Tenants Network, ensure that your business is presented with the ideal office solutions and advisory services.
We provide zero conflict, institutional grade expertise and a single point of contact to support your business, throughout your entire business life cycle.
GREAT, HOW DO I START?
Register your office brief on this page and receive real-time alerts on commercial properties for rent delivered straight to your inbox within your transaction window or lease event.
Explore the most suitable options by registering your interest or providing feedback to fine tune your evolving office requirements with our match-making algorithms, or simply speak to your dedicated account manager allocated to you shortly after registration.
Prefer a discussion over the phone? Speak directly with our account managers today, simply email us by clicking here, and we will be in touch same day for a call.
Revolutionise your office search with SAVVI today!
