Ground-floor shops offer higher visibility for food and daily-need retail.
Street-level retail space is regaining appeal in Hong Kong as retailers adjust location strategies amidst softer rents and a sharper focus on foot traffic, prompting a shift away from upstairs units once favoured for lower costs.
“Both local and overseas shoppers are value-driven, cultural- and experience-led nowadays in Hong Kong,” Kathy Lee, head of research and retail consultancy at Colliers International Group, Inc., told Retail Asia.
“This has increased competition for foot traffic, which in turn has led to brands shifting to store locations for higher visibility, particularly for food and beverage and daily-need retail,” she said in an emailed reply to questions.
Consumer spending has tilted further towards experience and engagement, reinforcing the appeal of streetfront stores. Brands see physical locations as spaces to tell stories, showcase products, and attract more customers rather than solely process transactions.
Lawrence Wan, executive director and head of retail leasing at CBRE Hong Kong, said many retailers, especially global luxury labels, are consolidating into fewer but bigger stores in prime districts to deepen customer interaction.
He said this strategy has helped keep vacancy rates relatively low on Tier 1 streets in core areas even as the wider market adjusts.
Lower rents have driven the shift, with street-level prices down sharply from past peaks and closer to upstairs rates, making high-visibility locations more accessible, Lee said.
Street shop rents are about 60% lower than their 2014 peak. “Street-level stores offer stronger footfall capture, higher brand recognition, and greater marketing value compared with upstairs locations,” Wan said in an emailed reply to questions.
The shift has drawn brands that once favoured upstairs units back to street level. Hing Kee Java Edible Bird’s Nest Co. Ltd. has opened ground-floor shops on Sai Yeung Choi Street South and at East Ocean Centre, whilst canteen-style restaurant Autumn Feeling has expanded from a Kwun Tong industrial building to streetfront outlets in Quarry Bay and Wan Chai.
Flexible leasing is also gaining ground. Short-term leases and pop-ups let retailers enter high-street locations with lower risk, whilst helping landlords keep spaces occupied and active, Lee said.
“Pop-ups and short-term leases have become a risk-management tool,” she said. “They allow retailers and restaurants to navigate the market without long-term rental commitments.”
Wan said pop-ups are increasingly used to test concepts, create buzz and support seasonal offers, with food and beverage, beauty, wellness and lifestyle brands among the most active users.
Market data points to a gradual recovery. Led noted that high-street rents in core districts such as Causeway Bay, Central, Tsim Sha Tsui, and Mong Kok rose 2.9% year on year in 2025, although they remain about 65% below their peak in the second quarter of 2013.
Vacancy rates in those districts stood at about 9% by the end of 2025, roughly half the level recorded in early 2021.
Cost remains key to decisions. Street-level shops still cost 10% to 20% more than upstairs units, meaning higher rents only work if they lift sales.
“It ultimately comes down to the role of visibility in driving sales and how rent levels align with the retailer’s margin profile,” Lee said. “In today’s market, the right location is less about prestige and more about operational fit.”
