Despite the growing political uncertainty at the end of last year, demand for Bangkok office space remained strong during a period of limited new supply, with vacancy rates falling below 10 per cent for the first time in 20 years, according to CBRE Thaila
“To date, we have seen no companies closing and no delays in ongoing leasing transactions, but we have seen a drop in enquiries,” said Nithipat Tongpun, executive director – head of office services at CBRE Thailand.
“Even if in 2014 office demand is weak, rents are unlikely to fall because of the high occupancy levels and limited new supply,” he added.
The total office stock in Bangkok was 8.1 million square metres at the end of last year, and the occupancy rate was 90.4 per cent. Occupancy improved in all locations and all grades.
Rents rose between 5 per cent and 9 per cent from end-2012 levels, depending on the quality and location of the building, said James Pitchon, executive director – head of CBRE Research and Consulting.
The total amount of occupied office space rose by 220,000 square metres in 2013, which was the best performance since 2005.
There are only 450,000 square metres of new office space under construction and due to be completed by the end of 2016, and some of this new space will be owner-occupied and not available for rent.
High occupancy and limited new supply means that office rents in Bangkok are likely to rise further, and that tenants will have limited choice.
The shortage of space, especially for larger requirements, has meant that tenants have been pre-letting in buildings under construction, Pitchon said.
Only two new grade-A buildings will be completed this year: AIA Capital Centre, a LEED (Leadership in Energy and Environmental Design) Gold building on Ratchadaphisek Road, will be completed in the third quarter; and Bhiraj Tower at EmQuartier, located opposite The Emporium on Sukhumvit Road at Phrom Phong BTS station, will be completed in the final quarter.
Both of these buildings already have tenants who have committed to leasing space.
Bangkok is still competitive, as it remains one of the cheapest office locations in the wider region. Only Manila, Wellington and Canberra are cheaper.
Core Central Hong Kong office rents are six times more expensive than the best offices in Bangkok.
Park Ventures on the corner of Wireless and Ploenchit roads retained its position as the most expensive office building in Bangkok, with rents of Bt1,000 per square metre, according to CBRE.