Even with weak economic growth, the Bangkok office property market performed well last year and should continue to be one of the country’s strongest sectors, according to CBRE. Vacancy fell to 8 per cent in 2016 while rents rose between 5 to 9 per cent, depending on location and grade.
With limited new office supply under construction and scheduled to be completed in the next 2 years, tenants are having to sign leases in new buildings before construction has been completed, notes CBRE research. This is in stark contrast from previous years when Bangkok suffered from a surplus of office space supply.
The Bangkok office vacancy rate dropped under 10 per cent for the first time since the early 1990’s in 2013 and has continued to drop. This has limited tenants choices in existing buildings with Grade A, central business district (CBD) developments with direct access to mass transit having the highest demand.
The choice of available space for large users in completed buildings is even more limited. Research from CBRE shows that there is no completed CBD Grade A office buildings with more than 5,000 sq. metres on consecutive floors. This forced tenants to sign leases to take up space in buildings which are still under construction in order to secure offices that match their requirements.
“CBRE has fully let SC Tower, a new 11,000 sq. metre development on Phaholyothin Road, even prior to its completion,” says Nithipat Tongpun, Executive Director – Head of CBRE’s Office Advisory and Transaction Team. “Previously, CBRE had leased 100 per cent of M Tower on Sukhumvit Road, for more than a year before completion, and 60 per cent of FYI Center on Rama IV Road before it was completed last year.”
CBRE expects the trend to continue in 2017 with tenants already committing to Gaysorn Tower, the only new Grade A building that will be completed in the CBD this year.
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