Hong Kong property: Templeton joins China Re in relocating to Two IFC as office rents fall

Hong Kong property: Templeton joins China Re in relocating to Two IFC as office rents fall

24 Jan Hong Kong property: Templeton joins China Re in relocating to Two IFC as office rents fall

Posted at 00:30h in Asia by

Hong Kong’s Two International Finance Centre (Two IFC) seems to be the preferred address for the banking and finance sector, as office vacancy rates rise and rents fall in the city.
Just a week after China Re Asset Management, a state-owned reinsurer, said it would relocate to the grade A tower in the core Central business area, US asset manager Franklin Templeton confirmed it was moving to a bigger office in the building that also houses the Hong Kong Monetary Authority’s headquarters.

“The new office space at IFC will be larger, significantly larger, than our current space,” a Franklin Templeton spokeswoman said. The company, which has been based in Chater House, another prime office tower in Central, for the past 22 years, did not say when it planned to move to the new office.

Based in San Mateo, California, Templeton is a global multi-asset manager overseeing about US$1.6 trillion of funds.

A general view of commercial buildings in Central, Hong Kong’s core business area. Photo: Yik Yeung-man
In November, average monthly rents for Hong Kong offices fell by 0.5 per cent to HK$52.30 (US$6.70) per square foot, while vacancies edged up to 12.9 per cent from 12.6 per cent in October, according to the latest data from JLL.

The decline in office rents has triggered many tenants to upgrade to premium buildings in the heart of Central, according to property agents.

Located on 8 Finance Street, the IFC complex consists of two skyscrapers, a shopping centre, as well as a Four Seasons Hotel. One IFC opened in 1998 and Two IFC in 2003.

While the Franklin Templeton spokeswoman declined to give details about the lease deal, citing confidentiality, property consultancy CBRE said the company had taken up 21,700 sq ft on the 62nd floor of the 88-storey Two IFC.

The fund manager will be paying HK$130 per square foot or HK$2.99 million a month for the space, according to local media reports.

Lease transactions so far this year in Two IFC have ranged between HK$130 and HK$150 per square foot, data from Centaline Commercial’s website showed. In 2023, leases were between HK$120 and HK$160 per sq ft. The peak price achieved in 2022 was HK$180 per square foot, about 28 per cent higher than the least expensive deal so far this year.

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Franklin Templeton has been operating from the 17th floor of Chater House on 8 Connaught Road, Central, since 2002, where it had leased 18,397 sq feet of prime office space.

Leases in Chater House ranged between HK$130 and HK$199 per square foot from 2018 to 2022, according to data compiled by Landvision, a commercial property agent.

Centaline Property Agency last week confirmed China Re had leased 6,740 sq ft on the 41st floor of Two IFC for HK$150 per square foot, or just over HK$1 million a month.

China Re was previously based in Three Exchange Square, where it had leased 5,000 sq ft on the 12th floor for HK$130 per square foot, or HK$750,000 a month.

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