THE BANGKOK OFFICE MARKET WILL CHANGE BY 2022

Real Estate Press Releases Wednesday June 19, 2019 11:50
Bangkok--19 Jun--CBRE Group
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 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 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.

Follow us on
Facebook: CBREThailand
Twitter: @CBREThailand
Instagram: CBRE Residential Thailand
LINE@: @CBREThailand
LinkedIn: CBRE Thailand
About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE established an office in Bangkok in 1988, followed by its Phuket office in 2004. CBRE Thailand has grown to be the leading real estate services provider, offering a broad range of integrated services, including property sale and leasing, facilities, transaction and project management; property management; investment management; appraisal and valuation; and strategic research and consulting. Please visit our website at www.cbre.co.th


Latest Press Release

RISC by MQDC Joins Public-Private Collaboration to Build a Neighborhood to Fight Toxic PM2.5 with Fresh One Electrostatic Urban Air Purifier in Heart of Bangkok

Research & Innovation for Sustainability Center (RISC) by Magnolia Quality Development Corporation Limited (MQDC), focusing on its key mission of "For All Well-Being" to enhance life for all living beings, following the launch of the "Fahsai" hybrid...

Herman Miller Introduces Atlas Office Landscape, Bringing Imagination and Intelligence to Space Planning

CHANINTR, a leading retailer of luxury home and office furnishing and the authorized distributor of Herman Miller in Thailand, is proud to launch 'Atlas Office Landscape' a new height-adjustable work system designed by Tim Wallace. Herman Miller's long...

Embassy Office Parks REIT Announces Third Quarter FY 2019-20 Results and Quarterly Distributions of Rs. 4,707 million

- Quarter marked by strong leasing, delivery of under-construction blocks ahead of schedule and completion of first acquisition since listing Embassy Office Parks REIT (NSE: EMBASSY) (BSE: 542602) ('Embassy REIT'), India's first listed REIT and the...

MQDCs Whizdom Club in Delhi wins national co-working award, acclaiming Bangkok-based developers debut project in India

MQDC's Whizdom Club in Delhi won the 'Co-Working Amenities of the Year' award at India's national Realty+ Co-working Summit & Awards 2020 with its innovative 'Inspiration Hub' concept, integrating co-working facilities with spaces to learn, network,...

วิสซ์ดอม คลับ บาย เอ็มคิวดีซี อินเดีย คว้ารางวัล co-working ระดับชาติ ตอกย้ำความสำเร็จในการเป็นผู้พัฒนาโครงการอสังหาริมทรัพย์ไทยในอินเดีย

วิสซ์ดอม คลับ บาย เอ็มคิวดีซี อินเดียคว้ารางวัล 'Co-Working Amenities of the Year' ที่งาน India's national Realty + Co-working Summit & Awards 2020 ด้วยแนวคิด "Inspiration Hub"...

Related Topics