Demand for Bangkok office space was at its lowest total since 2008 with vacancies rising and rents seeing no growth. According to JLL Thailand, net absorption in buildings for lease fell below 18,000 square meters during the fourth quarter of last year.
The consultancy also noted that more than half of this activity came from businesses downsizing their offices as several multinational corporations opted for smaller spaces. Only two known new leases, consisting of 2,300 square meters, were signed during the fourth quarter.
The vacancy rate in Bangkok rose again and now sits at 18.9 percent. JLL Thailand found that overall demand remains in a downward trend and many tenants who have previously committed to space are still waiting to move into new buildings.
Looking ahead, JLL believes current trends will continue into 2022 with new supply, competition and changing business requirements causing demand for Bangkok office space to remain flat.
“There are four office buildings scheduled to open in 2022, with a total of approx. 149,000 square meters. Average pre-commitment would reach 50 percent upon opening. Older buildings are expected to suffer from additional tenant’s downsizing activity. With the weak demand in the current market, by end-2022 the vacancy rate should then rise above 20 percent,” the JLL Bangkok Office Market Update noted.
The “New Normal” creates change in demand for Bangkok office space
There is a belief from some in the industry that demand for Bangkok office space is simply adapting to the “New Normal”. Firms are now adjusting as they better understand what is needed to operate successfully.
“For Thailand, the experiment with remote working during the lockdown has yielded encouraging results, and several companies intend to continue allowing employees to do so. In turn, it is prompting a reevaluation of their workforce strategy with a focus on cost savings on office space,” Roongrat Veeraparkkaroon, Head of Commercial Transaction Services, CBRE Thailand, said.
She continues, “But rather than putting a damper on office demand as a result of the anticipated shift to more remote working, CBRE believes occupiers will continue to demand a physical workplace, albeit a digitally enhanced one that provides a variety of settings to facilitate different working styles and is more effective in supporting collaboration, teamwork, engagement, and innovation.”
Related: CBRE bullish on long-term office outlook in Asia Pacific as Thailand adapts