With companies continuing to look for new, high-quality office buildings, non-prime buildings are now looking at new ways to improve their spaces to retain current tenants and attract new ones. Vacancy rates in non-prime buildings is at a relatively low nine percent but according to research from JLL Thailand, landlords are choosing to adopt different strategies to ensure their properties remain competitive.
“Despite the softened overall economy of Thailand, many business sectors have continued to perform well. This is reflected in buoyant leasing activity in the Bangkok office market where companies have continued to secure more space to accommodate business expansion,” Suphin Mechuchep, managing director of JLL, said in a press release. “Continued strong demand for prime office space is another example showing companies’ financial strength.”
JLL’s Thailand Property Intelligence Centre revealed that the average vacancy level for office space of all grades in Bangkok increased to 9.4 percent during the first quarter of this year. A majority of the increase in vacancy rate is due to a negative net absorption in non-prime grade buildings with ones that have limited or no access to mass transit being especially susceptible to losing tenants.
“To retain or increase competitiveness, landlords of non-prime grade buildings have become more flexible when negotiating lease terms with existing and prospective tenants,” Yupa Sathienpabayut, director of office leasing at JLL, explained. “Some of them offer more incentives such as more parking spaces, an increase in a fixed cap rate on renewal and/or longer rent-free periods for new tenants. However, very few of them have adopted a rental reduction strategy at this point.”
A number of major prime and non-prime office buildings in Bangkok have undergone recent renovations. These include CyberWorld Towers, Sindhorn Towers, and GPF Witthayu. Kian Ngwan Building II, Suntowers and the Vanit Buildings are office buildings currently being renovated. Minor upgrades that can take place during the renovation process include improvement of security access, vertical transportation, signage visibility, lobby, landscape or restrooms. Some buildings undergo massive upgrades like changing the entire facade of a building.
