长江实业旗下长江中心二期出租率升至约60%

A giant Hong Kong office tower owned by CK Asset Holdings Ltd. that remained largely empty since its completion in 2024 is finally in demand, signaling a recovery in one of the world’s largest commercial property markets.

Occupancy at the 41-storey Cheung Kong Center II building has more than doubled to about 60% since the start of this year, according to people familiar with the matter, buoyed by a strengthening economy that’s prompting financial firms to upgrade and expand their office footprint. Li Ka-shing’s CK Asset expects to have the skyscraper at least 75% occupied by the year-end, said one of the people, who asked not to be identified as the matter is private. A spokesperson for CK Asset declined to comment.

The building had entered one of the city’s worst downturns when it was completed two years ago, with only about 10% of the space leased as it struggled to compete with nearby peers.

The turnaround at one of Hong Kong’s flagship office towers points to a broader recovery in the prime office market after years of weak demand and rising vacancies. Grade A office rents in Central district climbed 7.3% in the first half, the biggest six-month gain in 15 years, while vacancy rates fell to 8.8% from 10.9% at the end of 2025, according to property consultancy Jones Lang LaSalle Inc.

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The surge in leasing at CKC II has been partly driven by a “spillover” from nearby trophy towers, including One and Two International Finance Centre, jointly owned by Sun Hung Kai Properties Ltd. and Henderson Land Development Co. , where vacancies are close to zero. Landlords for these and other red-hot skyscrapers have also attracted multiple prospective tenants competing months in advance for floors that will only become available later this year or in 2027, creating a waiting list, according to property agents.

“The landlords for those buildings in Central are able to increase the prices substantially and really cherry-pick which occupiers would add the most amount of value for their asset in the longer term,” said Alex Barnes, JLL’s Co-Chief Executive Officer for Greater China.

Finance and insurance sectors have led the recovery, accounting for about half of new leases in the first six months of this year, data from real estate services agency Cushman & Wakefield shows. US alternative investment manager Ares Management Corp. , Amsterdam-headquartered trading firm IMC Bloomberg Terminal and wealth manager Endowus Bloomberg Terminal have all expanded this year, following record leasing deals signed by Jane Street Group LLC and Qube Research & Technologies Ltd. last year.

The revival is being underpinned by Hong Kong’s strongest economic expansion since 2021, with first-quarter growth climbing 5.9%. A surge in equity capital market deals has also boosted demand from firms seeking space for long-term rental.

“As the overall economy improves this year, many companies are more open to a bigger budget for office upgrade or expansion,” said Ada Fung, chief operating officer of CBRE Group Inc. Hong Kong’s advisory services.

At CKC II, nearly one-third of its 560,000 square feet of available space has been leased out since the start of the year, according to data compiled by Centaline Property. New tenants include mainland Chinese firms such as PetroChina Co. as well as finance firms including First Abu Dhabi Bank PJSC.

Beyond the busiest Central area, JLL expects Hong Kong’s overall prime office rents to grow as much as 5% this year, potentially ending a downward trend that began after the market peaked in 2019.

Higher rents are also likely to encourage more well-capitalized investors to acquire assets. Office properties accounted for the largest share of investment transactions by both value and volume in the first half, suggesting a broader recovery in commercial real estate, said Tom Ko, executive director and head of capital markets at Cushman Wakefield Hong Kong.

Among the biggest transactions this year, Dah Sing Financial Holdings Ltd.’s banking arm unit agreed to buy office floors and retail space for HK$839 million ($107 million), while a unit of Singapore’s Wee Hur Holdings Ltd. paid HK$749 million for a distressed asset, according to regulatory filings.

The rental recovery, however, remains concentrated in the city’s core business districts. Vacancy still exceeds 20% in Kowloon East, which includes the former airport site, while Hong Kong’s Island East has also seen empty office space edge up. Rents in both areas are expected to continue falling, analysts say.

Even so, the long-term outlook for these districts could improve as new supply dries up. With the government suspending commercial land sales since 2023 to help stabilize the market, almost no new office space is expected to be completed outside the core districts from late 2027.

“It still takes time to absorb the current supply in the market,” said Wendy Lau, head of Hong Kong office strategy and solutions at Knight Frank. “An upswing in the entire office rental market is likely to happen in late 2027 or 2028.”

— With assistance from Kevin Dharmawan