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Bangkok office market to change by 2022: CBRE Research

Jun 19. 2019
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By The Nation

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Bangkok’s office supply space totalled 8.95 million square metres at the end of this year’s first quarter, increasing by 1.9 per cent year over year, according to CBRE Research.

Three office buildings were completed with a combined net area of 78,000 sq m – True Digital Park, MS Siam Tower and Ladprao Hills.

The overall vacancy rate increased from 6.6 per cent in the previous quarter to 7.5per cent in the first quarter of 2019. The total net take-up (growth in total occupied space) was at 41,000 sq m, decreasing by 36.1 per cent year over year.

Future office supply continued to rise in the first quarter, with construction starting on six more projects. Around 1 million square metres of new office space was under construction, increasing from 0.87 million sq m the previous quarter. This new space will be completed between the second quarter of 2019 and 2022.

About 60 per cent of total space under construction in Bangkok will be Grade A office space for rent in the CBD, including Mitrtown Office Tower, The PARQ (Phase 1), Vanissa Building, the Unicorn, O-NES Tower, EmSphere, One City Centre and the first phase of One Bangkok.

With around 1.2 million sq m of office space still at the planning stage where sites have been acquired, CBRE expects to see more construction starts. This will increase the projection of future supply beyond 2021.

Although there is a lot of space under construction, most of it will be completed after 2021, meaning options will remain limited between 2019 and 2020, noted CBRE. Mitrtown Office Tower and the PARQ (Phase 1) will be the only two Grade A office buildings in the core Central Business District, and are due for completion in 2019 and 2020, respectively.

“Tenants who need space during this period will need to plan ahead because of limited choices” said Roongrat Veeraparkkaroon, head of advisory and transaction services at CBRE Thailand.

By 2022, the total supply is expected to reach around 10 million square metres. The overall office market is likely to change with new supply exceeding CBRE’s forecasted demand due to the amount of new buildings being completed during this period. Meanwhile, vacancy is expected to rise in old buildings, which may force the landlords to offer attractive rents and improve the quality of their space in order to retain or attract new tenants.

The population density of office buildings will be higher because of “agile working” (where employees do not have allocated desks), and so buildings will need to have the lift capacity to deal with the volume of traffic. More people per floor will require more sophisticated air-conditioning systems to keep constant temperature in all working areas and there will need to be better thermal insulation. The greater population will also mean that tenants will need to consider if there are enough washrooms. Tenants are also demanding better supporting amenities in buildings. This will be a major challenge for older buildings, thereby making it harder to retain the best quality tenants.

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