Bangkok office supply totaled 8.95 million square metres at the end of Q1 2019, increasing by 1.9% Y-o-Y, 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% in the previous quarter to 7.5% in Q1 2019. The total net take-up (growth in total occupied space) was at 41,000 sq. m., decreasing by 36.1% Y-o-Y.
Future office supply continued to rise in Q1 2019 with construction starting on six more projects. Around one million sq. m. of new office space was under construction, increasing from 0.87 million sq. m. the previous quarter. This new space will be completed between Q2 2019 and 2022.
About 60% 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. Mitrtown Office Tower and the PARQ (Phase 1) will be the only two Grade A office buildings in the core CBD due for completion in 2019 and 2020, respectively.
“Tenants who need space during this period will need to plan ahead because of limited choices” says Ms. Roongrat Veeraparkkaroon, Head of Advisory & Transaction Services – Office at CBRE Thailand.
By 2022 the total supply is expected to reach 10 million sq. m.
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 hence buildings will need to have the lift capacity to deal with the volume of traffic. Agile working is where employees do not have allocated desks.
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 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.
Looking forward, CBRE believes more tenants will move to agile workplaces which means they will require less space but pay more rent per square metre as they will need good quality buildings.
The key question is how many companies are willing to pay significantly higher rents to get top quality premises which will depend on the rental gap between new Grade A and older Grade A and B buildings. If the premium for the best quality buildings is significantly higher than older buildings, it may be difficult for tenants to get approval for an increased rental budget.
Is There a Silver lining amid COVID-19?
Thinking of the future impact of this pandemic on office buildings, it may have already dawned on many of us that a majority of potential long-term trends and health measures will become permanent work-life features in the times to come.
The time is ripe to embrace Industry 4.0
Traditional brick-and-mortar retail has suffered tremendously, as countries have been implementing effective stay-at-home and social distancing policies to mitigate virus spread, while those worst hit have enacted strict draconian lockdowns
We have entered a time where, seemingly, interconnectedness is the new enemy, staying in is the new going out, and antisocial is the new social. COVID-19 has brought us on the cusp of growing accustomed to new norms and sounded a wake-up call in terms of how we live.
Covid-19 puts flexible space markets under strain
In the wake of operator defaults, landlords will be forced to re-evaluate the role of flexible space in their portfolios.
The global Covid-19 outbreak has had serious negative effects on commercial real estate, including flexible space. Of late, many operators have experienced the flexible nature of the business working against them, as many occupiers have opted to surrender desks and implement work-from-home plans.
Thai Credit Guarantee Corporation (TCG) Will Launch Bad Debt Guarantee Program for SMEs
The program will also cover SME loans that have turned into non-performing loans (NPLs), defined as loans overdue by more...
Skin-lightening products market to reach US$31 billion by 2024
In emerging Asian and African economies, the natural aspiration to enhance one’s circumstances has led to rapid growth in the...
Thailand’s Stock Exchange (SET) synergizes with CMDF to strengthen research for capital market development
The Stock Exchange of Thailand (SET) has joined forces with the Capital Market Development Fund (CMDF) to reinforce the Capital...
New Business Registration Tops Highest since January 2019
The top three sectors for new business registrations in January were building and construction (634), real estate (299) and transport...
Asian students are vital to the health of Australian universities
Over 170,000 international student visa holders are stuck outside Australia, unable to enter because of travel bans.
Facebook unplugs Thai military propaganda
Facebook said it deleted accounts intended for targeted audiences in the southern provinces of Thailand, where Muslim insurgent groups fight...
Subscribe via Email
National6 days ago
Thailand to further ease COVID-19 restrictions
Business6 days ago
THAI airways to sell training center building to raise more funding
Economics3 days ago
1.7 million Thais without smartphones register for "Rao Chana" benefits
Health1 week ago
200,000 doses of COVID-19 vaccine Distributed to 13 Thai provinces