New survey highlights clear challenges for Hong Kong office occupiers, while finding optimism for recovery and potential new opportunities in a changed market
- Cost savingsare now a primary focus, with more than 85% of respondents experiencing negativebusiness impacts from COVID-19
- Manyfirms are now anticipating reduced space needs over the next three years
- Around70% of respondents believe business will return to pre-COVID-19 levels withinthe next 12 months
- Firmsare clearly embracing remote working, with 65% of respondents expecting toadopt some degree of working from home on a long-term basis
HONG KONG, CHINA - MediaOutReach - 24 September 2020 - Cushman & Wakefield hasreleased their "Occupier Survey 2020:Hong Kong " report, a firststudy from the firm into how office tenants in Hong Kong are meeting thechallenges of COVID-19, how it has resulted in changes to their office leasingplans, and the degree to which pandemic-response measures have become apermanent fixture of their strategies. The report also offers recommendationsfor occupiers to help optimize their space strategies ahead.
"Many firms in Hong Kong began this year hopeful for a more stablebusiness environment following a difficult 2019, with U.S.-China trade tensionsand social unrest both having contributed to growing uncertainties. Themonths-long pandemic, however, has dealt many firms a third blow and led to aneven more uncertain business outlook amongst office occupiers. Beyond that,COVID-19 has also forced many to adopt new ways of working and given way to newpriorities that may outlive the pandemic," said Reed Hatcher, Head ofResearch, Hong Kong and the lead author of the report.
"The survey responses clearly reflect current challenges, while pointingto optimism for a recovery and a potentially new, more multifaceted officemarket," added Hatcher.
"Our recommendation to occupiers is to leverage thecurrent uncertainty and weaker market conditions now, in anticipation of apossible rebound in 2021. Such action can include restructuring leases toexpire in 2022/2023, at which point 5.2 million sq ft of new Grade A officespace is scheduled to enter the Hong Kong market. Many of the new buildingswill offer high specs, which may include LEED and WELL certifications, offeringoccupiers the opportunity to address health and safety in their portfolios," sharedKeith Hemshall, Executive Director and Head of Office Services, Hong Kong.
The survey was conducted from June to July 2020 and engaged key office occupiersrepresenting a broad cross-section of the city's office occupier market. Thefindings make clear that the recent months have been especially challenging forHong Kong occupiers. More than 85% of respondents have seen negative impacts totheir business from COVID-19. As a result, cost cutting has become the priorityfor many. The weak sentiment is also reflected in firms' longer-term leasestrategies, with many now anticipating smaller space needs over the next threeyears than at the beginning of the year, while a significant number are takinga wait-and-see approach.
However, many respondents also express optimism in a recovery. Around70% believe their business will return to pre-COVID-19 levels within the next12 months.
COVID-19 also evidently has long-lasting implications for the workplaceand how occupiers consider their space needs. While many firms have alreadyinvested in technologies to allow more agile working, the pandemic is furtherfueling the trend to support working remotely. And although it has not been asignificant trend in the past in Hong Kong, views are now clearly changing onthe subject of remote work, with 65% of respondents expressing interest inadopting some level of working from home on a long-term basis.
Key takeaways from Occupier Survey2020: Hong Kong :
- The majority of firms are suffering near-term businessimpacts from the effects of the COVID-19 pandemic, but are also optimistic forthe chances of a recovery in the next 12 months.
- The pandemic has very clearly had an effect on officeleasing strategies, with cost savings becoming the immediate focus for amajority of firms, while others are freezing leasing plans.
- Occupiers have revised their office space needs, withover a third of surveyed companies now planning to downsize over the next threeyears.
- There is significant uncertainty in lease renewal orrelocation planning, with many adopting a wait-and-see approach, while firms incore areas with higher rentals are more likely to relocate when their currentlease expires.
- Longer-term, in the aftermath of COVID-19, themajority of firms favor investment into technology and remote workingcapabilities, and firms are clearly embracing remote working, with 65% ofrespondents expecting to adopt some degree of working from home on a long-termbasis.
- Among firms indicating that they plan to continue toallow remote working post-pandemic, the majority suggest they will applyworking-from-home (WFH) practices to between 11% and 30% of their workforce.
- Staff preferences and risk hedging, rather than costsavings, are the main drivers for firms signaling a shift to some degree ofWFH.
- The mid-term future for the traditional office appearssecure, with very few firms stating that it will become obsolete within thenext 20 years, but many respondents do see office workplaces undergoing asignificant transformation in functionality in the coming years.
Click HERE to view the full report.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leadingglobal real estate services firm that delivers exceptional value for realestate occupiers and owners. Cushman & Wakefield is among the largest realestate services firms with approximately 53,000 employees in 400 offices and 60countries. Across Greater China, 22 offices are servicing the local market. Thecompany won four of the top awards in the Euromoney Survey 2017, 2018 and 2020in the categories of Overall, Agency Letting/Sales, Valuation and Research inChina. In 2019, the firm had revenue of $ 8.8 billion across core services ofproperty, facilities and project management, leasing, capital markets,valuation and other services. To learn more, visit www.cushmanwakefield.com.hkor follow us on LinkedIn (