For any new business in Hong Kong, renting an office is an important decision. Office rental issues center around factors such as financial resources available for the rental payments, size of the office, suitability of the office location for employees and customers, the image conveyed by the office set up, etc. For certain types of businesses (such as businesses that involve client interfacing) the choice of office location can have a significant impact on the success or failure of the business. Hong Kong’s position as Asia’s commercial capital and regional business hub has led to a steady increase in the number of business establishments that are set up here every year. As a result, offices in prime business districts command a higher rental fee. However, Hong Kong has a rich diversity in its commercial real estate stock and there are less expensive options available to suit every budget.

This article provides an overview of the office rental options available in Hong Kong and can help businesses make an informed decision on the most suitable type of office to rent.

Rental Option 1: Non-Serviced Office Space

Renting a non-serviced office space in Hong Kong generally means renting empty office space without furniture, IT infrastructure, utilities, etc. Although it may involve more time, effort and initial start-up costs as compared to renting a serviced office, it is the most cost-effective option for companies that are looking for long-term solution.

Traditional offices: Benefits

• Customized office space: Since most traditional office rentals are offered as empty shell space, there is wider scope for customization of the layout and unique branding to suit the business needs.
• Longer tenancy period: Businesses seeking a long-term rental lease will find traditional offices a suitable option. Most lease periods are for 2 years and above, which can be further extended if required, often at the same rental fee or at a pre-determined higher fee.
• Wider choice of office locations: Unlike serviced offices that tend to concentrate in Hong Kong’s business districts, traditional offices are spread across the island and offer a wider choice to businesses. Hence, businesses are not tied to higher rental fees due to a centrally located office.
• Lower long term running costs: Although the initial capital expenditure on leasing a traditional office may be high, the long-term operating costs are much lower than serviced offices.

Traditional offices: Drawbacks

• Long-term lease: The lease duration for traditional offices in Hong Kong is usually 2 years or more. This may not be suitable for start-ups that may initially want to test their market or for businesses that are likely to down-size unpredictably.
• High initial capital costs: Since traditional offices are bare office spaces, the business may incur a high capital expenditure on office layout design, build out, interior design, office furniture, equipment, renovation etc.
• Ongoing maintenance: Traditional offices require ongoing office infrastructure maintenance such as IT setup and maintenance, office housekeeping, etc. These tasks can drain money, resources, and energy.

Finding appropriate traditional office space in Hong Kong can take some time. Businesses have the option of choosing government owned premises or private owned premises. Government owned premises offer a specialized office environment and incubator services such as laboratories, warehousing, and other high tech facilities, especially for companies involved in science, technology, design or R&D. Industrial and business parks such as Cyberport, Hong Kong Applied Science and Technology Research Institute, Hong Kong Design Center and the Hong Kong Science and Technology Parks provide integrated infrastructure in one region that help reduce the per-business expense, and also help companies operate in a highly productive, environment friendly setting. Private owned premises are available across Hong Kong. Office rents vary depending on the location and age of the building. It is prudent to appoint an agent to assist in finding appropriate office premises and negotiating the lease terms and conditions.

Traditional office rental fees in Hong Kong can range from HKD 50,000 – HKD 185,000/month depending upon the location.

For detailed information on this topic, please refer to Guide to renting a traditional office in Hong Kong.

Rental Option 2: Serviced Offices and Business centers

Serviced offices (also known as business centers) are ready-made fully equipped offices that are in a condition where a new business can move-in immediately. This rental option is suitable for small startups as they offer low start-up cost, flexible tenancy periods, a choice of different office sizes, easy ability to expand, and a prestigious business location. Serviced offices are usually located in Hong Kong’s business districts and are run by specialized companies. Apart from small businesses, this option is suitable for companies who are seeking temporary premises for a short term and intend to relocate elsewhere in the long term.

Serviced Offices: Benefits

• Readily available infrastructure: Serviced offices are fully equipped and provide a complete range of business amenities and services such as reception services, office cleaning services, IT support and maintenance, office furniture, air conditioning, electricity, lighting, Internet connectivity, telecom connections, meeting and conference rooms etc.
• No capital costs: Since serviced offices offer a complete range of facilities, businesses do not have to incur capital expenditure on interior design, office furniture, equipment, renovation and agency fees.
• Flexible tenancy period: Serviced offices offer flexible lease terms ranging from 3 months, 6 months to 1 year. Depending on business needs and rate of growth of the business one can up-size or down-size workspace requirements at short notice and at any time. The lease can by terminated without forfeiting any money and a new lease with revised terms can be drawn up.
• Prestigious business address: Most of the serviced offices are located in Hong Kong’s prime business districts in Grade A buildings. A prestigious business location communicates credibility and stature to customers and other stakeholders.

Serviced Offices: Drawbacks

• High rental costs: The price to pay for the convenience of a serviced office is a high rental fee. While this may not have a serious impact on the business in the short term, it can work out to be an expensive option in the long term.
• Non availability of shared services on demand: Since the services offered by serviced offices are common to several tenants, it may not always be possible to gain immediate access to the shared services at all times (such as a conference room).
• Less Visibility: Often, business signage in a serviced office consists of a wall-mounted list on the reception directory board of business centers. Such a signage generates low visibility and does not create a strong impression on customers.
• Negative impression: Renting a serviced office is a double edged sword. On the one hand, a prestigious business address communicates credibility and stature, on the other hand it can generate a negative impression. Some customers and business partners may perceive the business as being small and unstable.

Serviced office rental packages in Hong Kong can range from HKD 8,000 – HKD 65,000/month depending upon the location and the range of services offered.

For detailed information on this topic, please refer to Guide to renting a serviced office in Hong Kong.

Rental Option 3: Virtual Office

A virtual office has no actual physical office space and therefore no associated costs such as rent, maintenance, lighting and so on. A typical virtual package encompasses a corporate business address; dedicated phone and fax numbers; personalized telephone answering; mail handling; and the use of private offices/meetings rooms/secretarial services on an ad-hoc basis. Most serviced offices offer the virtual office services as well.

Virtual Offices: Benefits

• Cost effective: Virtual offices offer the services of a full time office without the cost of running a full time office. It is a suitable option for businesses that do not require a physical space to operate.
• Prestigious business address: Instead of a generic PO Box address or home address that tends to create a negative impression with clients, business can have a bona fide physical address that lends prestige and credibility to the business.
• Local presence for international businesses: Virtual offices are useful for entrepreneurs who are based outside Hong Kong but need to show a business presence in Hong Kong.

Virtual Offices: Drawbacks

• Not suitable for client interfacing businesses: If the business involves frequent client meetings, opting for a virtual office may work against the business. Your clients may just walk into the business center hoping to see your office, only to find out that you don’t have a physical office there.

Virtual office rental packages in Hong Kong can range from HKD 700 – HKD 7,500 for a 3-month period depending upon the location and the range of services offered.

On a final note

Renting an office is a key decision for most business start-ups in Hong Kong. Hong Kong offers a variety of options in this regard. It is important to carefully consider the pros and cons of each office rental option available and evaluate it against your business needs to ensure that you make the right choice.