Bangkok Office Rents Continue To Soar

OFFICE SECTOR

Bangkok rents continue to soar

It's a 'landlord's market' as newly completed space is snapped up

BANGKOK: -- More than 211,000 square metres of new office space were added to the Bangkok office market in the first half of the year, easing an undersupply of space.

As a result, leasing activities have been buoyant in newly completed buildings, says the latest study by Jones Lang LaSalle, which offers real-estate services and investment management.

Head of research Dan Tanti-sunthorn said conditions in the Bangkok office market had become increasingly favourable to landlords and that several office-development projects that were previously suspended have been brought back to life.

Some of these projects have recently been completed, alleviating the frustration of companies facing expansion difficulties because of a lack of available office space. However, despite the increased availability of space, office rents continue to escalate.

Dan said total completions this year would offer about 238,000 sqm of new space and that the absorption rate would probably be similar, leaving an average vacancy rate at the end of this year about equal to what it was in January. This means the market will continue to be characterised by a lack of supply and remain a landlord's market. He said rents would continue to rise.

As of last month, office space in Bangkok totalled 7.31 million sqm, up from 7.1 million sqm at the beginning of the year. During that time, eight new projects were completed, of which Q-House Lumpini is the only one inside the central business district (CBD).

The others are Exchange Tower, Fenix, The Column, Supalai Grand Tower, Santanat, I Tower and Central Pinklao Office Tower B.

During the current second half, two new completions will add about another 27,000 sqm of total office space.

Rasa Tower II, a 29-storey office building on Phaholyothin Road, will offer a net leasable area of about 22,000 sqm. And Zen World, a 20-storey mixed-use project located on Rama I Road next to The Offices at Central World, will have 5,000 sqm of net leasable office space.

Dan said demand remained strong, reflected in an increased overall net take-up, from 79,700 sqm in the second half last year to 102,100 sqm during the first half of this year. This is a result of pent-up demand taking up space in newly completed buildings.

In the first half of the year, vacancy rates increased from 13.3 per cent to 14.4 per cent for all grades across the Bangkok metropolitan area and rose from 11.5 per cent to 13.2 per cent for grade-A office space inside the CBD.

The increased vacancy comes from newly completed spaces as yet unoccupied.

Dan said office rentals rose further, hitting a new high of Bt650 and Bt479 per square metre per month for CBD grades A and B, respectively.

The rise in grade-A rentals resulted from limited supply, which has prompted an increase in grade-B rentals.

The overall increase was also influenced by higher prices in newly completed projects.

--The Nation 2006-08-30