Employees reported a suspicious object encased in mud at the facility in Tseung Kwan O district in the New Territories, according to the Sing Tao Daily newspaper and other outlets.
A bomb squad concluded the 1-kilogram (2.2-pound) object was a hand grenade, possibly made in Germany.
Officers moved cars and piled sandbags around the grenade, then detonated it, according to Sing Tao, the Observer and other outlets.
No injuries were reported. Sing Tao cited police as saying there was no indication of criminal activity.