The office market in Bangkok was relatively stable last year with steady demand, limited new supply, falling vacancy rates, and rising rents helping keep things running smoothly, reports CBRE. The one negative was slower growth when compared to 2016.
Demand for office space in Bangkok is predicted to remain steady during the next few years. Vacancy rates in the city will stay low and rents will keep increasing, but not as much as they have in the past. Rental rates grew by 4-5 percent last year while the current office vacancy rate in Bangkok is 7.8 percent.
“As rents rise, office tenants will seek to reduce occupation costs by applying workplace strategies so they can put more people in less space,” says Nithipat Tongpun, CBRE Head of Advisory and Transaction Services – Office, in a press release.
With rents on the up and changes in international accounting rules requiring leases to be accounted for on the balance sheet, many multinational companies are looking at office alternatives. Co-working spaces are a popular choice and some businesses have already begun setting up shop here as opposed to leasing and fitting out traditional offices.
In the 2nd half of 2017, CBRE leased approximately 18,000 square meters of office space in Bangkok’s CBD area to co-working space operators. This year will see 4 international co-working space operators open their first locations in the city with all of them choosing grade A office buildings.
There are already several local co-working companies in Thailand and they are also expected to open more locations this year. CBRE is predicting that co-working will continue to grow in 2018, but note the office sector will still be dominated by a few key factors.
“Rent is still the most important factor for tenants when choosing their new office premises, followed by the location and how close the office building is to a mass transit station. The last factor, which has become more important, is to win the talent war by providing a working environment that allows companies to attract and retain the best employees,” says Nithipat.
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