The Henderson is struggling to reach half-occupancy as it prepares to launch this year (Image: Henderson Land)
Henderson Land Development has secured Audemars Piguet as the latest office tenant for its flagship skyscraper in Hong Kong’s Central district, the company said in a statement on Tuesday.
The Swiss luxury watch brand has committed to a full floor measuring around 12,000 square feet (129,170 square metres) in the 36-storey The Henderson office tower on Murray Road, which it will use for its Hong Kong office together with a private showroom for its timepieces, which retail from $45,000 each for a stainless steel model.
The developer said it has also locked in an international art gallery as a tenant, with the two new commitments helping to push pre-leasing in The Henderson to nearly 50 percent. “The endorsement from prominent international brands and industry giants like Audemars Piguet comes as another ringing validation of The Henderson’s unique strengths, and its prominence as a new iconic landmark of Hong Kong in strengthening our city’s international status,” said Henderson Land chairman Martin Lee Ka-shing.
The leasing level declared by Henderson leaves the office element of the 465,000 square foot, Zaha Hadid-designed tower more than half empty as it prepares to open later this year amid a market where average office rents have slid by 31 percent since 2019, according to JLL.
Demand Dips
As fundraising through initial public offerings in Hong Kong fell to a 20-year low of $2.2 billion in the first half of 2023, average vacancy for office buildings in Central, the city’s traditional business district, rose to 9.6 percent by the end of June, according to JLL.
Martin Lee Ka-shing of Henderson Land (Getty Images)
That drop in demand helped pull down rents in the Central office portfolio of Hongkong Land, whose properties compete with the Henderson, to an average of HK$107 per square foot per month by the end of the second quarter.
Market sources estimated to Mingtiandi that full floors in the Henderson are now leasing for around HK$100 per square foot per month.
Audemars Piguet will be joining British auction house Christie’s and US private equity giant Carlyle Group in the building with those two companies combined having booked an estimated 70,000 square feet of office space in The Henderson. When Henderson announced the Carlyle commitment in July last year, market sources put asking rents in the tower at HK$130 per square foot per month.
The Toronto-based Canada Pension Plan Investment Board has also signed up for two floors in the building, according to an account by Bloomberg in March.
Audemars Piguet is already a tenant in Henderson’s H Queen’s commercial building on Queen’s Road in Central, where it leases a pair of floors of around 4,500 square foot each.
While the Swiss watchmaker did not comment on its new office in Central, Henderson said that the new space will include a location for its AP House boutique, adding to the brand’s five existing locations in Hong Kong, including one in H Queen’s.
Set next to Chater Garden at 2 Murray Road, The Henderson occupies a former car park site which the developer bought for a record HK$23.3 billion in 2017. The LEED Platinum project has 25 office floors and is situated less than 10 minutes’ walk from the Central MTR station near the Bank of China tower and the Cheung Kong Center.
Mingtiandi understands that CBRE advised on the transaction, however, the company declined to comment when contacted.
Central More Accessible
Audemars Piguet opting to expand its footprint in Central is part of a trend of office occupiers making upgrades as rents slide to new lows in the district, according to Chris Hui, executive director of office services at Colliers.
“We see a consistent trend that tenants in CBD locations including Central are likely to stay in the same district,” Hui told Mingtiandi on Wednesday.
He added that the agency’s data shows average rents for Grade A offices in Central have fallen from their peak of HK$147.9 per square foot per month in February 2019 to just HK$104.5 per square foot per month in August.
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