Rent at office tower redeveloped on The Excelsior's site may be the highest in Causeway Bay amid shortage of commercial space

By Lam Ka-sing / | April 2, 2019 3:02 PM SGT
The office tower to rise from where The Excelsior hotel stands on the foreshore of Hong Kong's Causeway Bay may command the highest rent in the district by the time its redevelopment is completed in 2025, barring a catastrophic economic meltdown in Hong Kong.
The site, known as Lot One, was the very first piece of land sold in Hong Kong when the city became a British colony in 1841. Jardine Matheson, one of Asia's largest and oldest conglomerates, has owned it ever since, putting up the 869-room hotel on the site in 1973.
This weekend, The Excelsior unplugged its lights and locked its doors for the last time, ending 46 years of history after Jardine's Mandarin Oriental Hotel Group decided to spend US$650 million to redevelop the hotel into a commercial complex with 63,500 square metres (683,500 square feet) of gross floor area.
"We have to be practical," said Mandarin Oriental's chief executive officer James Riley. "If one looked at this site and the value that could be realised from redeveloping the building as a hotel, it was significantly less than the value that could be realised from redeveloping it as an office block."
Causeway Bay is also transforming from a shopping and entertainment area into a commercial district, as some professional firms have already been pushed out by Central's eye-watering rents to look for cheaper space elsewhere. And no other office tower is being developed in Causeway Bay over the next five years , said Eric Ong, chief operation officer of Midland IC & I, a real estate agency.
Mainland Chinese companies flock to Hong Kong's Central district. SCMP Graphics
The office rent on The Excelsior's site "could be the highest in Causeway Bay," said Ong, projecting that it could surpass the district's current record holder Hysan Place at about HK$100 per sq ft per month.