Businesses are moving to Bangkok’s fringe in the search of new office set ups.
The love of brand new is nothing new in Asia. People aspire to have the latest phones, cars, condominiums or trends. This desire is now transferring to the workplace too. As some of Bangkok’s office buildings are starting to date, landlord’s are upgrading these to attract new tenants. Subsequently, as a number of buildings are going under refurbishment, rents are being pushed up as demand is outstripping supply. Real estate firm Knight Frank has illustrated this with their recording of office occupancy rates at 93.1 percent as of the end of 2016.
Knight Frank has also noted that many businesses are moving to newer properties. And these newer properties are situated in ‘fringe’ locations. The reason? Their location means that they have more affordable rents and they benefit from the improved mass transit network lines. On top of these, they come complete with better and newer facilities that older buildings do not possess.
Whilst new condominiums are always in demand, the difference with commercial space is that office tenants do not benefit from improving the property. As land values rise, condominiums are becoming smaller. For investors wanting a property for their own use, some are turning to older buildings to get the space that newer buildings do not have. This pattern is also occurring in the rental market too. Renters, particularly among the expatriate population, are opting for older buildings that are well maintained and offer big floor plates. Often rented at a fraction of the price compared to newer buildings of the same size.
However the commercial market is different. Many businesses rent their office space rather than own it. Therefore they want the ease that everything is set up for them. They do not want to waste valuable time and money with their office that could be utilised elsewhere in their business. Plus they want shiny new buildings to attract employees.
Knight Frank’s data reveal that rents for the best offices (grade A) in Bangkok’s CBD are THB 960 per square metre per month. However, buildings of a similar quality but located in the fringe are considerably lower at THB 818. These figures alone make it easy to see why many businesses are starting to shift their locations.
