E-commerce driving office demand

In 2013, e-commerce businesses accounted for only 5% of CBRE’s office lettings transactions. This increased to 15% in 2015, accounting for over 20,000 sq.m. of office space let through CBRE. The exponential growth in this sector is not surprising given the growing popularity of online shopping in Thailand.

The four key characteristics e-commerce businesses look for in an office building is location, quality, efficiency and lifestyle. The preferred location is within the CBD, or close to the CBD such as Ratchada. Whichever location they choose, access to mass transit is a mandatory requirement.

To project the right image for their companies, e-commerce businesses tend to prefer high-quality buildings with extensive facilities, hence the preferences is for Grade-A offices. The image factor is also important in terms of attracting young talent and Generation-Z employees who tend to be more lifestyle and image conscious. Several e-businesses who have bigger space requirements have also opted to shift to newer buildings. For example, Lazada shifted from One Pacific to Bhiraj Tower @ EmQuartier.

The building and floor plate efficiency is another important consideration. E-commerce businesses tend to have open-plan offices and cleaner space, therefore an efficient and column-free floor plate is important as it allows flexibility in the fit out. This is also a reason why new buildings are preferred as older buildings are not column free and often pose restrictions in the space fit out. The working environment in e-businesses are typically less formal than corporate offices and many look to replicate a Google-style workspace which offers extensive recreational facilities and activities interspersed within their workspace. Meeting rooms and work spaces are often set in a semi-casual environment as this is believed to encourage idea sharing. All of these design features require a column free and flexible floor plate, but the degree to which each company spends on the fit out and decoration tends to vary. Given these are technology companies, the wiring and internet system is another key consideration.

The lifestyle element is also important. This again relates back to building the right image for the company to draw the right employees. Office buildings which offer retail and lifestyle amenities such as a fitness centre, dining and entertainment options are becoming increasingly attractive. These add-on amenities help attract young talent. Bhiraj Tower @ EmQuartier where Lazada is located is a prime example of this. Connected to the EmQuartier shopping complex, employees of companies located at Bhiraj Tower @ EmQuartier benefit from having access to the Virgin Active Fitness Club, an extensive range of retail shops, a cinema, restaurants, cafes and bars right at their doorstep.

Whilst the growth rate of e-commerce businesses is unlikely to be sustained at the same level as the past two years, we do believe the trend will continue into 2016 and that the sector will account for a larger proportion of the office demand in Bangkok than it previously has. Other sectors which remain equally important in terms of office demand drivers are manufacturing/industrial, services, health care and finance.