Bangkok office tenants moving away from ‘old’ buildings

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The Stock Exchange of Thailand building on Ratchadaphisek Road is one of the prime developments in what used to be a “fringe” area of the capital. (Bangkok Post file photo)

 The trend of tenants moving away from older centrally located office buildings to new properties in “fringe” locations of Bangkok is likely to continue in 2017, according to a study by the property services firm Knight Frank Thailand.

New buildings that are competitively priced in areas that were once considered “fringe” locations are becoming much more desirable, said Marcus Burtenshaw, executive director and head of the commercial agency department of Knight Frank Thailand. Some of those buildings are now easier to reach, better connected by mass transit and boast new facilities and features that older buildings are hard-pressed to match, he said.

Given that office rents in the capital are now at record highs, it is an appropriate time for owners of centrally located grade B properties to consider renovations and repositioning, he said.

According to Knight Frank Thailand Research, as of the end of 2016, the supply of office space totalled 4.78 million square metres, an increase of 2.5% from 2015.

The company expects 184,471 sq m of new supply to be complete in 2017 and another 335,811 sq m to be offered in the market within the next three years.

At the end of 2016, 4.45 million sq m of office space was occupied, representing an occupancy rate of 93.1% and an increase of 0.9 percentage points from 2015.

Mr Burtenshaw said occupied space in grade B buildings in the central business district fell for several reasons. However, one promiment factor could be that in the face of rising rents, tenants are choosing to relocate away from Grade B office buildings in the CBD to new buildings in the city fringe, he said.

Overall, occupancy in the fourth quarter rose by 1.1% from the third quarter of 2016, though the figure was 2.5% for CBD grade A properties.

In 2016, the average rental rate for grade A offices in non-CBD areas showed a high growth rate of 13.1% from the previous year.

Grade A offices in the CBD have the highest rental rate at 960 baht per sq m per month, followed by those in the non-CBD area at 818 baht.

 

Source : Bangkok Post

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