Bangkok offices still attractive to prospective renters

 Bangkok offices still attractive to prospective renters

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Bangkok offices still attractive to prospective renters

Thai capital is 15th most affordable premium office location in the world, according to JLL

Bangkok is the 15th most affordable premium office location in the world, according to the latest “Premium Office Rent Tracker” from the global real estate services firm JLL.

The survey of 100 office markets and sub-markets in 86 cities shows that Bangkok also ranks as the fifth most competitive premium office market in Asia-Pacific and second in Southeast Asia in the same category.

The tracker provides a benchmark view by JLL of the best achievable office rents in the best buildings in the world’s top markets. The research provides a reference tool for corporate occupiers seeking to compare occupancy costs and find the best value, as well as for global investors looking to identify sources of real estate demand for premium space.

According to the report, Hong Kong-Central remained the world’s most expensive premium office location at US$240 per square foot per year (equivalent to 6,500 baht per square metre per month), despite a decline in rents of more than 20% over the past year.

The average occupancy cost for premium space in Bangkok was $44 per square foot per year, or 1,190 baht per sq m per month. Nairobi offers the least expensive rents in the world at $17 per square foot per year.

On average, rents for premium buildings worldwide have fallen less than the broader Grade A office market, demonstrating the resilience of quality workspace, according to JLL. However in Bangkok, the impact of Covid-19 has had a similar impact on both premium assets and the wider Grade A market, with values falling by 4.5% and 4.4% year-on-year, respectively as of the fourth quarter of 2020.

Michael Glancy, head of transaction businesses at JLL, said Bangkok office rents have dropped for the first time since 2011, largely due to softening demand from business sectors that have been hit hard by the pandemic and increasing vacancies as businesses look to “right-size”.

“Bangkok has over 2.4 million square metres of new supply [in the pipeline] over the next six years, which will create competition between landlords to attract and retain occupiers, keeping rents at an affordable level for the foreseeable future,” he said.

“This new supply will help to transform the quality of real estate across the city over the long term, helping to attract local and international businesses to base themselves in Bangkok.”

As office workplace requirements adjust to the new normal, premium offices offer collaboration space, serving as social hubs and centres of innovation, said the JLL report. The banking and finance sectors, traditional occupants of premium space, continue to be the driving force of rental demand, followed closely by tech firms, which are particularly active in innovation-rich cities.

“The pandemic has proved to be an accelerant of trends in commercial real estate,” said Jeremy Kelly, director of global research at JLL. “As markets adapt and recover, we anticipate both investors and occupiers will continue to seek out premium real estate for its ability to adapt to a new purpose of work.”