Rents for Grade ‘A’ office buildings outside of Bangkok’s central business district (CBD) have risen by 12 percent over the last year from THB635 to THB683 per sqm, compared with Grade ‘A’ CBD buildings where rents rose by 3.2 percent from THB841 to THB859 per sqm, according to real estate firm CBRE.
The main reason for this change, the firm said, has been the completion of AIA Capital Center on Ratchadapisek. The quality of AIA Capital Center is higher than any of the Grade ‘A’ buildings in the city centre and has raised the average of non-CBD rental rates, where most existing buildings are classified as Grade ‘B’.
Demand for non-CBD offices has been driven mainly by tenants relocating within a similar area. CBRE has not, as yet, seen tenants relocating from the CBD to less central locations because of rising rents.
The Ratchadapisek / Rama 9 area has seen the biggest growth in take-up out of all the non-CBD locations due to the completion of new buildings such as the Ninth Towers and AIA Capital Center. CBRE expects to see further growths in take-up with more office developments in the pipeline in non-CBD locations.
In terms of demand, not all tenants need or want to be in the CBD, but they do need good road and expressway access and almost all tenants now want to be close to a mass transit station.
There is also demand for quality buildings in non-CBD locations. Tenants are willing to pay higher rents for well-designed high specification buildings even if they are using them for back office functions because they find they can fit more people into less space in a comfortable environment within a better quality building.
More tenants appreciate the advantages of efficient and column-free floor plates, modern air-conditioning systems and efficient lifts.
Despite the weak economy, there is a shortage of competent talent in Bangkok and in order to attract the best employees, companies need to provide an attractive and convenient work environment. This is why tenants are not all choosing buildings with the cheapest rent but are willing to pay for convenient locations with access to mass transit and a good quality workplace environment.
Bangkok will continue to be a city where there are multiple office clusters as well as a core CBD. The most popular non-CBD locations will be those that have access to mass transit and good road and expressway access, as well as supporting neighbourhood facilities particularly modern retail outlets.
There also needs to be a range of office buildings including Grade ‘A’ quality developments.
CBRE expects future office developments in non-CBD locations to be concentrated in Ratchadapisek, along the MRT Blue Line and Sukhumvit, particularly within the radius of Bangna station on the BTS Green Line.
This article by Aliwassa Pathnadabutr, Managing Director of CBRE Thailand, was published in The Nation on May 23 and is republished with kind permission of CBRE.
