Bangkok office market faces fresh supply amid high vacancies

Bangkok’s office market faces fresh supply pressure as another 119,000 square metres of space is expected in the fourth quarter of 2026, despite 1.6 million sq m already standing vacant.

Completions at One Bangkok Tower 2 and Summit Tower could put further pressure on occupancy as new properties compete with existing buildings for tenants. The additional space comes at a time when landlords remain under pressure to offer competitive terms and companies are increasingly selective about where they lease.

Panya Jenkitvathanalert, partner and executive director, head of office agency at Knight Frank Chartered (Thailand) Co., Ltd., said the market had begun to stabilise in the third quarter after a substantial influx of new supply. However, a full recovery remained some way off, with demand concentrated in buildings offering the quality and functionality tenants required.

Overall occupancy edged up 0.1% from the previous quarter to 76.4%, still below the 10-year average of 83%. Average asking rent held at THB858 per sq m per month, indicating that the improvement in demand was not yet sufficient to support a significant market-wide increase.

New buildings capture demand as other properties lose tenants

The split between newer properties and the rest of the market underlines the limits of the recovery.

BTS Visionary Park, Cloud 11, One Origin and AIA Connect together recorded an increase of 66,000 sq m in occupied space during the third quarter. The rest of the market, by contrast, registered a net decline of about 16,000 sq m.

“Demand has not disappeared, but tenants are becoming more selective,” Panya said.

“New buildings that meet their quality requirements can attract tenants more effectively than older properties.”

Gross take-up reached 109,000 sq m, while tenants vacated 59,000 sq m. Reported net absorption was 51,000 sq m, down from 69,000 sq m in the preceding quarter.

Locations outside the central business district (CBD) accounted for 49,000 sq m of net absorption, compared with only 2,000 sq m within the CBD, reflecting the contribution of new projects outside the city’s traditional business core.

For landlords, the challenge is not simply to find more tenants. Buildings need to stand out to organisations reviewing both their costs and how they use office space.

Tenants retain room to negotiate

High vacancies continue to give tenants leverage over lease terms, including rental discounts, rent-free periods, additional incentives and contributions towards office fit-out costs.

These concessions can matter as much as headline rents because companies assess the total cost over the life of a lease. For owners, protecting occupancy and limiting vacant space may therefore take priority over securing short-term rental increases.

Performance varied by building grade. Grade A occupancy rose 1.6% to 79%, while average asking rent increased 0.3% to THB1,271 per sq m per month.

Grade B occupancy fell 0.6% to 73%, despite a 0.7% rise in asking rent to THB869 per sq m per month. Grade C occupancy increased 0.4% to 80%, with rent edging up 0.1% to THB545 per sq m per month.

New supply arrives as companies control costs

Bangkok’s total office stock grew 0.8% quarter on quarter to 6.82 million sq m following the completion of AIA Connect, which added 53,500 sq m of office space. No office buildings were withdrawn from the market during the period.

Environmentally certified office space increased 1.8% to 3.03 million sq m, representing 44% of total supply and highlighting the growing role of green buildings.

The expected fourth-quarter additions will require time to secure tenants while competing with substantial existing vacancies. Meanwhile, completion of Boonmitr Silom and Project O has been postponed to 2027.

Slower economic growth is also influencing leasing decisions. Thailand’s gross domestic product grew 1.9% year on year in the second quarter of 2026, down from 2.8% in the first quarter. On a seasonally adjusted basis, the economy contracted 0.2% from the previous quarter.

Against that backdrop, businesses are more likely to focus on controlling costs, relocating or consolidating their offices than expanding space to accommodate growth.

A forward-looking confidence index for the next three months rose to 50.8 on expectations for the tourism season and government measures. However, it remains too early to conclude that this improvement will translate into widespread office expansion.

Outer business districts gain ground

New buildings and competitive rents helped locations outside the CBD attract demand, although performance differed between areas.

Average asking rent outside the CBD increased 0.5% quarter on quarter to THB699 per sq m per month, while occupancy rose 0.2 percentage points to 78%.

The Phahonyothin–Vibhavadi area recorded a 5.1-percentage-point increase in occupancy to 80%, with rent up 0.6% to THB724 per sq m per month. In Bang Na–Srinagarindra, occupancy climbed 3.5 percentage points to 69%, while rent rose 0.3% to THB690.

Phetchaburi–Rama IX–Ratchada followed a different pattern. Asking rent increased 0.7% to THB733 per sq m per month, but occupancy fell 3.7 percentage points to 78%, partly because AIA Connect entered the market with an initial occupancy rate of 30%.

“Non-CBD locations attract demand through new buildings and competitive rents, but that does not mean every area will grow at the same rate,” Panya said.

“Each new building still needs time to establish its tenant base.”

Within the CBD, average asking rent fell 0.4% to THB976 per sq m per month, while occupancy remained broadly unchanged at about 75%.

In Phloen Chit–Chit Lom–Wireless Road, rent declined 1.1% to THB1,063 per sq m per month, although occupancy rose 1.1 percentage points to 76%.

Nana–Asok–Phrom Phong rents held at THB903 per sq m per month, with occupancy slipping to 79%. Silom–Sathon–Rama IV rents were also unchanged at THB1,017, while occupancy eased to 74%.

Slower supply from 2027 could ease pressure

A reduction in new completions from 2027 could give the market more time to absorb vacant space, but the scale of existing vacancies means any recovery is likely to be gradual.

“The longer-term outlook is starting to show positive signs, with new office supply due to enter the market through 2031 falling to 530,000 sq m,” Panya said.

“About 54% is under construction. After 2026, new completions are expected to average 82,000 sq m a year.”

“New supply in 2027 will total 50,000 sq m, and there are currently no projects scheduled for completion in 2028.”

Panya said the slower development pipeline would ease some competitive pressure, but sustained absorption would still be needed to reduce the 1.6 million sq m of vacant offices.

The immediate test remains the arrival of 119,000 sq m in the fourth quarter. Beyond that, the pace of recovery will depend on the broader economy and companies’ ability to expand, rather than simply move between buildings or consolidate their existing space.