As January 2026 enters its final stretch, Hong Kong’s office market has delivered a piece of positive news. Hongkong Land announced that global alternative asset management firm Ares Management (Ares) will expand its office space in Gloucester Tower, Central, doubling its current footprint by adding approximately 12,500 square feet. The new lease will take effect in March this year. Simultaneously, street-level retail vacancy rates in Central have plummeted to 4.3%, far below those of Causeway Bay (8.3%) and Tsim Sha Tsui (7.9%). These figures suggest that after years of adjustment, Central's core business district is showcasing stronger resilience and recovery momentum compared to other commercial areas, potentially signalling the bottoming out of the office market.
Rents Stabilising as Institutions Snap Up Premium Assets
Central's office market is currently a classic "tenant's market." After years of corrections, rental declines are nearing their end, presenting a golden opportunity for well-resourced institutions to secure prime spaces.
According to Colliers' recently released "2026 Hong Kong Property Market Outlook" report, office market sentiment in Hong Kong saw a significant rebound in the second half of last year. Data shows that the quarterly net absorption rate reached 428,000 square feet in Q3 and 1.23 million square feet in Q4, resulting in a full-year net absorption of 1.73 million square feet—the highest since 2018. Central alone accounted for a remarkable 400,000 square feet of net absorption in 2025.
Additionally, rental declines have visibly narrowed. Grade A office rents fell 5.8% across Hong Kong last year, with Central experiencing a 5.6% drop. Most of this decline occurred in the first half of the year (-4.8%), while the second half saw a much smaller decline of just 0.8%. This trend suggests that the prices of premium assets in core business districts are stabilising. Ares' decision to expand at this moment reflects its strategic move to capitalise on a market bottom, locking in top-tier office space at competitive costs.
IPO Boom Fuels Demand for Financial Services
Beyond rental incentives, growing business demand is another key driver of Ares’ expansion. Specializing in private equity, credit, and real estate investments, Ares’ growth is closely tied to the activity of capital markets.
Hong Kong’s IPO market made a strong comeback last year, driven by policy support and improving market sentiment. According to HKEX data, Hong Kong IPO fundraising reached over HK$285.6 billion in 2025, a 224% year-on-year surge, reclaiming the global top spot ahead of the New York Stock Exchange and Nasdaq. The number of companies listed in Hong Kong increased to 117, up 67.14% from the previous year.
With Hong Kong’s IPO market regaining global leadership, demand for cross-border mergers, acquisitions, and financing is rising. Ares’ office expansion aligns with its business growth needs, reflecting Hong Kong’s enduring strength as an international financial hub. Landmark noted that banking and financial services tenants currently account for 42% of its Central property portfolio, illustrating the robust leasing demand and resilience of financial institutions in core locations.
PwC forecasts that approximately 150 companies will successfully list in Hong Kong in 2026, with total fundraising expected to range between HK$320 billion and HK$350 billion. More than 10 of these companies are projected to raise over HK$5 billion. This outlook highlights Ares’ preparation for the financing and investment opportunities arising from major IPOs while ensuring it is well-positioned to leverage the market recovery by upgrading its operational space and workforce capacity.
Multinational Corporations Flock to Central to Secure Prime Locations Ahead of Recovery
Ares’ expansion is not an isolated case. It reflects a broader trend of leading financial institutions returning to or consolidating their presence in Central. Several recent examples include:
Point72: The U.S.-based hedge fund initially committed to leasing approximately 60,000 square feet at The Henderson but recently increased its lease to cover seven floors, totaling 85,000 square feet. The company has already signed the agreement and plans to move into The Henderson by May 2026.
Jane Street: The quantitative trading giant pre-leased over 220,000 square feet in Phase 1 of Henderson Land’s flagship Central Yards development in May 2025. This marks the largest single leasing deal in the area in decades, accounting for over 70% of the first phase’s office and ancillary spaces. The property is expected to be ready for occupancy in early 2027.
Qube Research & Technologies: In December 2025, this fund management firm signed a lease for approximately 140,000 square feet in Two ifc, previously occupied by UBS. The move supports its rapid expansion in the Asia-Pacific region, with phased occupancy planned for 2027.
These cases demonstrate that despite ongoing vacancy pressures in the overall office market, Central’s top-tier Grade A office buildings continue to hold strong appeal. Multinational corporations are taking advantage of rental corrections to secure premium assets, aiming to lock in favourable positions ahead of a full market recovery and prepare for future business expansion.
The Ripple Effects of Financial Giants Expanding: How Ares is Fortifying Central’s Retail Ecosystem
Ares Management’s expansion in Gloucester Tower not only highlights trends in the office leasing market but also reflects shifts in Central’s retail landscape. The growth of financial institutions in the area brings a stable, high-income workforce, whose spending habits are increasingly becoming a crucial pillar supporting the retail sector in Central, reducing the district’s reliance on tourism.
This trend can be observed in recent brand location strategies. Swiss sportswear brand On Running opened a flagship store on Queen’s Road Central, catering to the demand for athleisure and performance apparel among office workers in the district. These functional sportswear products are becoming a common wardrobe staple for financial professionals, reflecting a shift in their lifestyle preferences. The foot traffic generated by institutions like Ares provides a steady base of local customers for such lifestyle-focused brands, showcasing the stable consumption patterns of professionals in the area.
On the dining front, Landmark’s rooftop dining space, Forty-Five, introduced restaurants like The Merchants, clearly targeting the business clientele in the area. These venues offer privacy and stunning views, catering to the needs of high-level financial executives conducting business meetings. As asset management companies expand in Central, the demand for these multifunctional dining spaces is rising, supporting the stable development of the dining market in the district.
Another example worth noting is Sotheby’s opening a flagship gallery in Landmark Chater. By extending its business to ground-floor retail, the auction house aims to directly connect with Central’s affluent clientele. For many financial professionals, art is often seen as an essential component of asset allocation. This type of high-end retail strategy, targeting wealthy consumers, fills a gap in Central’s retail market beyond traditional luxury goods, adding a unique competitive edge to the area.
Conclusion
Ares’ expansion is more than just a business growth initiative—it signals a clear bottoming out and stabilisation of Central’s core business district. As Hong Kong’s IPO market continues to strengthen, international financial institutions are seizing the opportunity to lock in premium assets. This not only reinforces the fundamentals of the office leasing market but also injects stability into the district’s dining and retail sectors.
The financial industry drives capital flow, which in turn supports spending power and boosts property value, creating a virtuous cycle. This interplay demonstrates that Central is emerging from its adjustment period, steadily shaping a more resilient commercial environment and laying the foundation for a full-scale recovery in the near future.
