Excellent news for those looking into co working space in Sukhumvit, the forecast for the Bangkok office market remains positive, at least for the short-term; the next three years. The forecast is born out of the market’s current state, with office space developments being fairly uncommon, meaning that new supply was somewhat low.
The long term forecast, however, is more ambiguous, with signs of the demand growth rate slowing down for the second quarter.
Bangkok currently has a total office supply area of 8.6 million m2 with a vacancy rate sitting at 7.5%, a 20-year low. Between 2017 and 2020, office space developments in the city is expected to add only 420,000 m2 of office space.
The troubles of Bangkok’s economy didn’t do much to the office market, with growth in demand remaining fairly strong over the past four years, with the city’s annual occupation growth rate sitting comfortably at 200,000 m2.
The favourable conditions for a co working space in Sukhumvit and the office market in Bangkok is attributed in part due to the e-commerce sector, whose emergence has led to companies setting up offices in order to establish themselves and their platforms in Bangkok.
The office market has also been growing due to the consumer finance sector, as banks and other financial institutions move into the city and set up shack to provide services through the internet rather than through bank branches.
The slowdown of demand growth will not affect the market’s short-term too negatively, due to the limited office space currently under development. The rate of growth for rent could deviate wildly, though, based on the building and the location it’s in.
A property consultant in Thailand, CBRE Thailand, has noted significant discrepancies in the rent of Bangkok’s Central Business District’s grade-A office segment.
According to them, tenants are willing to pay premium rent for a grade-A, high-spec office building in prime real estate in the city. Older grade-A buildings also see their tenants move towards newer grade-A buildings.
Currently, there’s 2,000,000 m2 worth of office space that’s slated for development, but not currently under construction. The primary issue is if the completed new supply exceeds market demand, vacancy rates and rents will change in response, rising and dropping, respectively.