Bangkok’s office market has recovered very well in the years following the global recession. Vacancy rates have declined from 14.8% to 9.4 % while rents have risen by more than 34 % from 2011 to today, local media reports. This has also led to more supply being added to the market.
The total stock of office supply in Bangkok is expected to surpass 8.8 million square meters by the end of the year with 1.2 million square meters of office space set to be finished between 2018 and 2022, according to JLL research. This new supply will most likely affect older office buildings in Bangkok.
“Although we expect the growth in demand to keep pace with new supply, older office buildings may see some negative effects. This is because almost all of the new office development projects that are in the pipeline will be of very high quality, with some such as One Bangkok, which will be built to LEED and WELL platinum standards possibly necessitating a new ‘Premium Grade’ asset class and are therefore likely to attract leading conglomerates and MNCs better,” says Yupa Sathienpabayut, Head of Office Leasing at JLL, to the Bangkok Post.
Despite this, older buildings can still be competitive in the right circumstances, especially ones in prime locations in Bangkok. As long as they are well managed, maintained, and improved at all times, these office towers can be appealing to tenants.
“One key advantage that some owners of older buildings have is a prime location in central business areas with close proximity to mass transit stations. Most of these locations cannot accommodate new development projects. Despite older age, these buildings can stay competitive when landlords adopt appropriate strategies. Renovation, a critical element in improving competitiveness, can be seen by the recent post-renovation success of office buildings such as Sindhorn Towers, GPF Witthayu, Siam Tower and Vanit Building,” says Yupa.
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