More positive outlook for Bangkok office market

The commercial office property market in Bangkok is beginning to see a move forward and growth in demand and rent, following a period where the market has been held back due to the combination of the global crisis and Thailand’s political uncertainty.
 
The latest analysis from property consultant CB Richard Ellis shows that while office demand has been slow, the market as of the second quarter of 2011 was more active with clearer signs of expansion from existing tenants and a marginal increase in occupancy rates from the previous quarter to 86.5%.
 
CBRE’s office enquiries were up 34.2% quarter on quarter, an upswing indicating the market is heading towards the right direction. Also 59% of enquiries involved an expansion, indicating that the key demand driver is from the expansion of existing businesses and space requirements from existing tenants rather than demand from entry of new multinational companies (MNC’s).
Key growth industries in the past several years have been in the service and consultancy sectors. The trend of expanding businesses and space requirements is expected to continue and with limited new supply coming to the market, rents will increase.
 
On the supply side, developers of new office buildings have a clear development direction and ensure that the building specifications matches tenants’ requirements such as ceiling heights, the core to window depth, a column free space layout, knock out panels enabling tenants to install a private inter-floor staircase, direct BTS link, destination control lifts with turnstiles for security in an elegant lobby.
 
The developer of Park Ventures Ecoplex, a new Grade-A office on the corner of Wireless and Ploenchit Roads, for example, has surveyed top Grade-A office buildings across the Asia Pacific region and carefully studied tenant’s requirements beforehand to ensure they deliver a specification and design that matches tenants’ needs.
 
Apart from technical specifications, companies are increasingly focused on sustainability and energy efficiency, particularly MNCs who require LEED certified buildings. The Leadership in Energy and Environmental Design (LEED) accreditation is awarded to projects which have been designed to minimise the impact on the environment while improving the indoor environment for occupants.
 
Features that maximise energy efficiency, water efficiency and use of sustainable materials are some of the essential criteria. More tenants are now embracing the green trend and setting higher standards for their work place environment with factors such as indoor air quality and circulation and natural lighting being key considerations as these factors have measured benefits in terms of a company’s effectiveness and efficiency.
 
In addition to quality and environmental considerations, access to mass transit is essential and the focus remains on the CBD areas which accounted for 71% of all CBRE office enquiries in the second quarter of 2011.
 
The preference continues to be near mass transit stations along the Sukhumvit Line from Siam to Ploenchit, a direct BTS link or where two mass transit systems intersect. New Grade-A buildings which meet these requirements can achieve a rent of up to THB800 per square meter per month, higher than the market average of THB680.
 
‘With market indicators pointing in a positive direction, the current market is ideal for tenants looking to make their move. It is recommended that tenants who need to make their move in the next two to three years make their move decisions now to take advantage of existing rents and an opportunity to upgrade to newly completed premises,’ said CBRE.
 
‘With a limited new Grade-A supply and almost no new supply in the pipeline coupled with continued business expansion, rents will increase as soon as take up reaches a certain point,’ it adds.