By Cheryl Arcibal

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Hong Kong’s office segment is picking up due to leasing demand from mainland Chinese law firms and financial groups, supported by a buoyant stock market that has seen an increasing number of companies launch initial public offerings (IPOs) in the city.
Office-leasing activity in August grew for a fifth straight month, with tenants absorbing 313,800 sq ft of net space, according to data compiled by JLL. The overall vacancy rate in the city increased 0.1 per cent to 13.5 per cent month on month in August, despite the completion of One Causeway Bay, which added more than 1 million sq ft of space, the property consultancy added.
Meanwhile, office rents declined 0.2 per cent month on month in August, the smallest decrease so far this year, JLL added.
This could be the start of a recovery for the embattled office sector, which has been plagued by an abundance of new completions coupled with a sluggish economic recovery, according to analysts.

“Despite interest rate pressure and softening demand presenting immediate challenges to the office-leasing market, new drivers are emerging in Hong Kong’s office sector,” said Jack Tong, a director at Savills. “This is driven by a resurgent financial sector and robust end-user sales activity, with office rents in Central expected to recover ahead of the broader market over the next few years.”
One notable leasing deal last month was by Jun He Law Offices. The Beijing-based law firm leased an entire floor covering 14,830 sq ft at AIA Central in Central, the main business district.
In the second quarter, US equity firm Ares Management leased 24,800 sq ft in Gloucester Tower in Central. FWD Group, the insurer founded by tycoon Richard Li Tzar-kai, leased 107,700 sq ft in Devon House in Quarry Bay.
Hong Kong reclaimed the crown as the world’s top IPO venue in the first half of the year, with 42 firms raising US$13.5 billion in the city, according to data from the London Stock Exchange Group. The total IPO proceeds swelled further in August, standing at HK$118.2 billion (US$15.2 billion) from 46 China-domiciled companies.
Savills forecast that if the recent leasing trend was sustained, annual office absorption could return to the pre-Covid-19 level of 1.3 million sq ft, along with 400,000 sq ft from end-user acquisitions and 400,000 sq ft from typical displacement demand, resulting in a total annual absorption of 2.1 million sq ft.
“Under this optimistic scenario, vacancy rates were expected to peak at 16 per cent in 2026 before gradually declining to 6 per cent by 2030, potentially triggering a rebound in office rents,” Savills said.
Despite the revival of stock market activity, not all sectors are expanding in the same way they did before the pandemic.
For example, between 2022 and 2025, the space leased by law firms shrank 7 per cent to 1.96 million sq ft from 2.11 million sq ft, reflecting rightsizing as well as exits from Hong Kong by firms such as Winston & Strawn, Addleshaw Goddard and Dechert, according to a joint study by Colliers and John Chiu Consulting.
While mainland Chinese law firms expanded their real estate footprint by 6.1 per cent to 87,676 sq ft, law firms from the UK and the US reduced their footprint by 7.7 per cent to 483,510 sq ft and 8.3 per cent to 779,925 sq ft, respectively, the report added.
In addition, only 7 per cent of law firms in the city were leasing space in the HK$110 (US$14.14) and above per square foot range this year, compared with 26 per cent in 2022, the study said.
The report said that while “Central remains a prime destination for law firms”, new lettings from the sector were likely to be limited but highly strategic, as firms seek premium space in the district, driven by a flight to quality.