Goldman gives up space in Hong Kong tower amid office slump
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Waning demand from international banks is taking a toll on the city’s weakening rental market.
PHOTO: BLOOMBERG
Hong Kong - Goldman Sachs has given up some office space in Hong Kong, according to people familiar with the matter, the latest setback to the city’s commercial real estate market as global banks trim space to save costs.
The investment bank is relinquishing a floor in Lee Garden Three in the Causeway Bay area, said the people, who asked not to be identified because the information is private. Goldman Sachs leased five floors in the building for its back office in 2018.
Banks including Goldman Sachs and Citigroup have been cutting staff in Asia in the past couple of years, after revenue from stock sales and mergers fell.
That is adding to pressure on the office market in Hong Kong, which is among cities worldwide facing a commercial real estate slump stemming from the Covid-19 pandemic and rising interest rates.
Goldman Sachs declined to comment. Hysan Development Co, Lee Garden’s landlord, did not respond to a request for comment.
Waning demand from international banks – traditional tenants for Hong Kong’s premium office towers – is taking a toll on the city’s weakening rental market.
The banking and finance sector made up 18 per cent of new leases by floor area in 2023, down from 29 per cent in 2022, according to CBRE Group Inc.
Hong Kong’s vacancy rate increased to an unprecedented 16.4 per cent at the end of 2023, CBRE data shows. Grade A office rents could fall by as much as 10 per cent in 2024, after slipping 6 per cent in 2023, it estimates. BLOOMBERG
