Hong Kong retail landlords saved after 10% decline in Q2 2021

Emerging concepts like art exhibitions and delivery-only kitchens are changing the city’s retail landscape  

Art exhibitors and delivery-only kitchens are reshaping Hong Kong’s retail landscape, helping occupy landlords’ empty spaces that used to be the world’s highest commercial real estate rents, reported South China Morning Post.  

Helen Mak, senior director and head of retail services at Knight Frank, said, “Landlords are more willing to accept new concepts as they need to shift their strategy to tap local demand.” 

The city’s retail sector has been undergoing a rough downturn, with many international brands like Gap, Topshop, and Prada having either exited or scaled down their operations due to the 2019 political unrest and subsequent COVID-19 pandemic.  

According to Savills, shopping centre rents in Q2 2021 decreased by 10.2 percent year-on-year and 45.2 percent from a peak three years ago.  

In Central, a 14,000 square feet store on Queen’s Road has been leasing out on a short-term basis, after Topshop closed its last and largest store in Hong Kong in October last year. However, last week, the two-storey store was rented out to Digital Art Fair.  

“Art and culture will become a new retail trend,” said Mak. 

Retail landlords are also being supported by unexpected tenants, such as video bloggers who have opened physical stores after converting their followers to sales.  

Moreover, delivery-only kitchens were another emerging leasing trend. These kitchens enable “ghost kitchens” for restaurants, which is a professional cooking and food preparation facility organised for the making of delivery-only meals.  

Since its launch in 2017, food delivery app Deliveroo’s delivery-only kitchen, Deliveroo Editions, has expanded to six locations. Its restaurant partners can use the space for their business and are charged a commission per order. 

“Deliveroo invests upfront in the Editions kitchens. This further helps restaurants as they can expand with lower risk in addition to taking very little capital risk,” it told the Post. 

More: Hong Kong luxury rents expect to rise 5-10% by end of 2021

JLL added that food delivery companies were currently in an aggressive expansion mode. 

Oliver Tong, head of retail at JLL in Hong Kong, mentioned, “They are looking for 5,000 to 6,000 sq ft ground-level shop spaces in densely populated districts.”