Y/H4/6 CGO – Response to Comments
Decentralization of Grade A offices is already the solution to the lack of space in Central and the Central Business District (CBD) generally so the suggestion by the planners that 28 500sq.m of Grade A office that the proposed West Wing site will provide will go towards alleviating the shortfall of Grade A space is Central is both naïve and misguided as it represents the proverbial ‘drop in the bucket’ in the context of the overall supply.
Given that there will be no more reclamation taking place in Victoria Harbour the lack of supply of suitable sites in Central has long been recognized by the property industry and as the following data will demonstrate decentralization of offices has been successfully taking place over the past two decades in order to meet Hong Kong’s requirements during its transition from a manufacturing base to an international service centre.
At a Seminar on Office Development held on 12th March 2011 both the Secretary for Development and the Director of Planning produced some very interesting information on this subject setting out the position in Hong Kong as at the end of 2010.
Their definition of CBD covers the north shore of HK Island from Sheung Wan through to Causeway Bay and on the Kowloon peninsula from West Kowloon along to Hung Hom.
Going back to 1995 there was about 4m sq.m of Grade A office space split equally between the CBD and decentralized locations. By 2000 there was 4.51m sq.m, 66% of such GFA within the CBD with 2.37m sq.m, or 34%, elsewhere. Arriving at 2010 the figure for the CBD had only risen to 4.76m sq.m ,now 53%, whereas decentralized offices had grown to 4.26m sq.m or 47% of the total stock of Grade A offices. So in the last decade nearly 2m sq.m of Grade A office has been built in decentralized locations in order to meet the ongoing demand for such quality office space.
Put another way there has been, and there always will be, a shortfall of supply in Grade A office supply in Central. This is reflected in the extremely high rentals that are being charged and paid. However with the market now providing decentralized alternatives at prices a third or half of those in Central the end users now have a genuine choice of where to locate and what price to pay and are indeed exercising such choices.
In any event there is a good case for arguing that today Central has reached saturation point as regards the provision of office space. A casual observation on any working day will reveal congested and polluted roads that cannot cope with the existing volume of traffic, footpaths that are too narrow to cater for comfortable pedestrian movement, journeys on the MTR that are unpleasantly over-crowded and the difficulty in finding a place to eat at lunch time. In short the existing infrastructure cannot support the intake of any more people.
In his 2011-12 Budget Speech the Financial Secretary said ‘ To enhance our competitiveness we must maintain a steady and adequate supply of Grade A offices and strive to develop new high grade office clusters through land use planning, urban design, area improvements and the provision of better transport networks.’ This statement clearly recognizes that there is virtually no possibility of major supply coming from within the CBD and certainly not in Central so there is a need to look elsewhere and indeed this is what is already happening. A good example is Kowloon East that covers Kowloon Bay, Ngau Tau Kok and Kwun Tong. Already there is 1.3m sq.m of Grade A office space there. There are 6 government sale sites for commercial/business use that when sold could generate a further 0.35m sq.m and overall there are 68 hectares of redundant industrial land now zoned for OU(Business) which, assuming a plot ratio of 10, will over time produce close to 6-7m sq.m of new office space. There are other examples such as the proposed office node around Kai Tak so overall Hong Kong is well placed to meet its present and future needs for Grade A offices.
One final thought, if the immediate supply of office space is so important, is why not reconsider the use of Murray Building and offer it for sale as offices, for which it was originally designed and built, rather than hotel? The existing gfa is 42560sq.m which is greater than planned for the West Wing site. The buildings characteristic window design won a Certificate of Merit of the Energy Efficiency Building Award in 1994 and further upgrading to HK BEAM or LEED environmental standards could be carried along the lines of the work currently being done on the China Resources Building in Wanchai to achieve Grade A quality.
Real Estate & Construction Dept,
13th April 2011