Short term Hong Kong lease boom
Growing ranks of Hong Kong landlords are renting out retail space for as little as 90 days to ride out the downturn.
The number of short term Hong Kong leases has risen sharply since November, according to property agent Midland IC&I.
The trend began in the lead up to the Christmas-New Year retail peak when landlords opted to have tenants for a short term in preference to forgoing any rent at all.
Now, in the lead-up to Lunar New Year, the trend has continued as retailers look for opportunities to optimise sales in a peak spending season – and landlords are happy to achieve a return on otherwise empty space.
The most likely retailers to sign up are jewellers – the hardest hit by the changing demographic of Mainland Chinese tourists – and apparel brands creating pop up stores.
Retailers are securing space for as little as three months while landlords are achieving about 70 per cent of the normal rent they would have received prior to the retail downturn kicking in.
Midland IC&I CEO Wong Hon-shing told the Hong Kong Economic Journal retail tenants liked the flexibility of being about to exit the space with as little as seven days’ notice.
The HKEJ said brands to take advantage of the new environment include Bossini, Tse Sui Luen Jewellery and Colombia. It reported TSL was paying about $350,000 a month for space in a three month lease set to end in February after the Lunar New Year.