The average monthly rental price in Central remained unchanged at HK$122 per square foot in the third quarter, according to DTZ.

Vacancy, however, rose slightly to 1.2 percent in the quarter from its record low of 1.1 percent in the previous three months.

This signifies a shrinking demand for Grade-A offices by finance, insurance, real estate and other professional services (FIRE) sectors hit by the volatile market as global finances wane.

Alva To, head of DTZ consultancy, suspects there is pressure on rental reductions in the area, but since the vacancy rate is low, the reduction percentage will be minimal.

The impact on the office market in Hong Kong is not yet clear, since many companies are undergoing reconstruction and consolidation. To said it will be clear next year.

Amid an abundance of new supply, such as Landmark East and Manhattan Place, together with a cheaper rental level, tenants have more choices in relocating their businesses. The non-FIRE sector has underpinned demand for office space, and Kowloon East was seen as a good option to those who are searching for cheaper office space under tighter cost controls.

(HK Edition 10/15/2008 page2)