The demand for retail space in office buildings is growing as restaurants, convenience stores, fitness clubs, and beauty salons see these as an ideal place to open new outlets, according to JLL. While retail rents in office buildings vary, due to the limited supply, it is usually more expensive than office space in the same building.
“While rents for retail space in office buildings vary depending on a number of factors such as location, foot traffic, street exposure, and the building’s quality. Rents for retail space on upper floors and basement floors are relatively lower. There are a few exceptions where retail space on upper floors commands higher rents. These include retail space on a mezzanine or second floor that connects the building with a mass-transit station,” says Yupa Sathienpabayut, Director of Office Leasing at JLL, to the Bangkok Post.
Food and beverage outlets and banks prefer to take up retail space on the ground floor of office buildings. Popular coffee shop brands such as Starbucks, Au Bon Pain and Cafe Amazon have moved into office buildings in droves while convenience stores have begun taking up retail space in these buildings as well. However, many companies are still cautious before selecting a retail space.
“Though retailers have a keen interest in expanding into office buildings, they have adopted a cautious approach when selecting the space where they want to set up shop. Foot traffic and demographics (both building users and visitors) are the top criteria for choosing a building. While high foot traffic ensures more visits to the retail space and higher sales, targeting the right customers in the right place is no less important,” says Yupa.
At the moment, retail space in most of Bangkok’s prime office buildings is full or close to being full, according to JLL. There is some space available in newly completed buildings or under-construction office development projects. Even with limited supply available, demand from retailers will likely remain strong.
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