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Tuesday, Jun 03, 2025

Office decentralisation trend in Hong Kong EJINSIGHT

Office decentralisation trend in Hong Kong EJINSIGHT

In Hong Kong, workers have grown accustomed to having the flexibility to work remotely as a result of the pandemic, which saw the biggest remote working experiment in history.
Remote working arrangements have significantly cut down commute time and costs – which have long been a source of stress for many, thereby allowing workers to have more control of their daily schedule and improving overall work-life balance. This shift in employee behaviour and mindset has resulted in a growing demand for offices to be located closer to where people live, well-connected and cost-effective.

Yet, with all the hype about remote working, the workforce is not quite ready to completely let go of physical workspaces. There is still a pertinent need for a physical office from time to time, notably, to create and strengthen organisational culture, and facilitate efficient discussions through face-to-face contact, amongst others. This is why hybrid work arrangements are fast emerging as the preferred way for many companies – whether from home, the office, or co-working spaces that bridge the two – enabling employees to have access to more than just one traditional way of working. Flexible working has also brought about a host of benefits to both employers and employees alike – such as reduced costs and better work-life balance respectively, to name a few. In addition, IWG’s research has also shown that flexible working is now a deal breaker in the war for talent – with 83% of workers around the world citing that they would turn down a job that did not offer flexible working.

As such, companies are now rethinking their office set-up, and are looking to incorporate more flex into the way they work and operate. One of the ways in which they can do so is through opting for convenient co-working spaces closer to people’s homes as opposed to a permanent office set-up. Many co-working spaces come with industry-leading technology that allows teams to collaborate more seamlessly and boost productivity, and also have the option of shorter lease commitments. According to IWG, the demand for flexible workspaces is strong in Hong Kong, with inquiry rate up 30% compared with pre-COVID. Demand is particularly strong in locations such as Kowloon East, Mong Kok and Tsim Sha Tsui, comparing to the traditional central business districts (CBDs) on the Hong Kong island.

Hong Kong has long been an international finance hub and the need for quality office spaces can no longer be met by solely traditional CBDs. This challenge has also been addressed by the Hong Kong Government by rolling out the “Energising Kowloon East” initiative to promote the area as a new CBD. The 488-hectare Kowloon East comprises of Kai Tak Development, Kwun Tong and Kowloon Bay Business Areas will provide cost-effective options of high grade office buildings and retail centres to support Hong Kong’s long-term economic development.

According to the Development Bureau, the estimated working population for the district will be over 326,000 in 2024. According to a CBRE research, the majority of office development, investment and leasing activities will focus on the up-and-coming CBD locations such as Kowloon East, West Kowloon and Wong Chuk Hang in the next 5 to 10 years, with Kowloon East having the greatest capability to emerge into a premier office submarket.


These irrevocable shifts in the office real estate market has in turn placed increasing pressure on real estate landlords to adapt to the changing needs of corporate office occupiers who are already reducing footprint in search for more flexible workspaces and agreements – whether through shorter leases or monthly rentals.

According to JLL, total surrender space has risen to a record-high of 1.77 million sq ft as an attempt to save rental costs under the gloomy economic outlook. However, the real crunch for landlords would not come immediately as tenants are tied to leases, so landlords need to act now or risk securing new leases down the road. With 30% of the global office inventory projected to become flexible by 2030, landlords that partner with flexible workspace providers will likely be more attractive to companies as they rethink their real estate strategy and seek to adopt flexible working arrangements in the post-pandemic era.
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