JLL identifies the need for office space with a new lease of life
The desire for prime and modern office space is on the increase in Bangkok according to recent data released by Jones Lang Lasalle. Average vacancy rates for office space has slightly risen to 9.4% for the first quarter of 2016 – an increase of 0.4% from the end of 2015 – due to the lack of demand for non-prime buildings where vacancy rates stands at 9.7%. A result of tenants moving to higher specification premises.
Ms Yupa Sathienpabayut, director of office leasing at JLL, says; “Recent large leasing transactions in Bangkok are concentrated in prime office buildings, despite higher rents. Many of these transactions are relocations, which are contributing to rising vacancies in non-prime grade buildings”.
Landlords of non-prime buildings are advised to be flexible and remain open to negotiations in order to retain existing tenants, and secure new tenants. Whilst office rents are continuing to rise throughout the market, JLL have noticed that rental growth is slowing down in non-prime buildings compared to prime buildings as tenants search for modern premises. Those buildings worst affected lack decent or no access to Bangkok’s mass transportation network.
Mrs Suphin Mechuchep, managing director at JLL, comments that; “Despite the softened overall economy of Thailand, many businesses sectors have continued to perform well. This is reflected in buoyant leasing activity in the Bangkok office market where companies have continued to secure more space to accommodate business expansion. Continued strong demand for prime office space is another example showing companies financial strength”.
JLL have calculated that 5.54 million sq m of Bangkok’s 8.51 million sq m of office space is in non-prime grade building. Improvements to non-prime buildings can range from better security systems or updating the appearance of the lobby, to complete refurbishments of the building’s interior or exterior. Options that landlords are considering to satisfy market trends.