Office
The office vacancy rate in 2014 was below 10% and CBRE expects that figure to hold steady in 2015. An estimated 200,000 square meters of office space will come on the market and, according to CBRE’s forecast, net take-up will match that amount.
Although the first half of 2014 was slow, there was an uptick in activity in the latter half. “As the political situation improves, demand will continue to grow,” said Mr. Nithipat Tongpun, Executive Director, Head of Office Services, CBRE.
For example, take-up at the AIA Capital Center was above 60% within just a few months of completion despite many companies deciding to put their expansion plans on hold in the earlier part of the year. In 2015, Bhiraj Tower at EmQuartier and AIA Sathorn Tower will also be completed, both Grade A CBD offices which will attract interest from local and foreign tenants.
Consequently, CBRE expects to see rents rise but they will be slow, steady increases rather than any dramatic jump.
Retail
“In this segment, we can expect to see a bit of a battle of the giants,” said Mr. James Pitchon, Executive Director – Head of CBRE Research, Thailand, referring to the increased competition amongst malls of all types.
The newer malls are going head to head against older, more established malls. For example, the upcoming Bangkok Mall will be up against Mega Bangna and Central Plaza Bangna. Further afield, Mega Rangsit, which will launch with Thailand’s second IKEA outlet as its anchor tenant, will be up against Future Park Rangsit, which currently dominates that area.
Recently, community malls have also become popular but it remains to be seen how many of them actually have the capacity to hold their own, seven days a week, 12 hours a day. Thus far, their performance has been mixed. La Villa, off BTS Ari, is a success due to its location, density of local population including residents and office workers, ease of accessibility, mix of tenants and lack of direct competition in the area. Elsewhere, however, community malls struggle with low occupancy and rental rates despite their central locations.
Despite all this, the number of community malls is on the rise in the suburbs. Rental rates and occupancy remain dependent on various factors such as area, grade, and reputation of developer.
CBRE is also keeping an eye on the push to expand retail upcountry. Low spending power due to a bad combination of high personal debt and low agricultural prices have had an adverse effect on these locations.
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