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Rent Bangkok Office – Office Tenants Must Plan for Expansion

By on Aug 23, 2013 in Office

A special article on advice for office tenants in Bangkok written by Nithipat Tongpun, Executive Director – Head of Office Services, CBRE Thailand, for the British Chamber of Commerce Thailand

The office market continued its robust performance in terms of rising rental rates and occupancy levels across the whole market. We are seeingRent Bangkok Office

an upward momentum in the office market similar to its heyday before the 1997 Asian Financial Crisis. Buoyant demand coupled with limited vacant space has meant that office landlords are now in the driving seat in contrast to the previous decade where tenants were in a much stronger position and were spoilt with a wide range of office space with lower rental rates. We believe that the office market will continue its upward trend against the backdrop of a positive economic outlook.

With limited office space availability, it is crucial for office tenants to plan well ahead for their relocation and expansion decisions. This is to ensure that tenants will secure t

heir most preferred office space in the current low vacancy environment.

The office vacancy rate has continued to decrease with the current vacancy rate at only 12% at the end of Q1 2013 in contrast to 32% at the end of 2000. The take up rate for the whole of 2012 was 160,000 square metres from a wide range of industries and nationalities.

The future supply of office space is rather limited. There are 490,000 square metres of office space under construction and scheduled to be completed by the end of 2015. This is only a 6% expansion from the current level. Less than 30% of the anticipated space will be Grade A and within the Bangkok CBD area.

A combination of growing demand and limited supply has resulted in rental rates breaking record levels set in the 1990s. For example, Park Ventures, a Grade A CBD office building, achieved the highest rent in Bangkok of THB 980 per square metre and asking rents have now exceeded THB 1,000 per square metre setting a new benchmark for the Bangkok office rental rate. The building was fully leased less than two years after opening.

We are expecting the vacancy rate to fall below 10% by 2015.

Having said earlier that we are moving towards a landlords market, we believe that this is the right time for tenants to seriously plan for their expansion and relocation ahead of the anticipated tightening of office supply.

Office tenants can place themselves in the most advantageous position by looking ahead and planning well in advance. Tenants with large space requirement who are able to commit to pre-leasing will be able to negotiate better deals.

Source | The Link Issue 4 2013, Magazine of British Chamber of Commerce Thailand.

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