Tech, legal, accountancy and financial businesses increased Bangkok office occupancy in the third quarter of 2022, with transactions doubling from the second quarter, according to property consultant Knight Frank Thailand.
Panya Jenkitvathanalert, executive director and head of the firm's office agency, said the overall office occupancy rate in the third quarter rose to 81.3% from 80.1% in the second quarter, bolstered by a gradual recovery of the economy.
"The office market in the third quarter became more active as demand continued to grow, thanks to a return-to-office theme," he said. "Tech and professional services companies like legal, accountancy and financial advisory were the most active groups."
The total volume of leasing activities in the third quarter grew by more than double from the second quarter. However, net absorption remained steady, implying that a lot of business relocation took place, said Mr Panya.
Wutthiphon Taworntawat, managing director of commercial property developer UHG, said office tenants in the central business district (CBD) areas relocated to non-CBD areas as they wanted to save costs.
"Both the CBD and non-CBD areas where tenants relocated have mass transit lines running alongside but the rents of the latter are 30% lower," he said. "Some relocated to non-CBD offices because they wanted to expand their space within their previous building but such spaces were unavailable."
Mr Wutthiphon said financial institutions also drove non-CBD office demand as they wanted to have contingency locations outside inner-city areas for business continuity.
In the first quarter of 2023, UHG plans to open a new office building called Sukhumvit Hills near Sukhumvit Soi 58 and Bang Chak skytrain station. The 20-storey building, costing 1 billion baht to develop, has a lettable area of 10,000 square metres.
The rental rate will be 750 baht per month per sq m on average, and the company is targeting tech and startup firms looking for office spaces near mass transit lines with affordable rents, he said.
According to Knight Frank, future supply of Bangkok office space would total 1.75 million sq m, representing 30% of the current supply. Around one third will be in CBD areas.
As of the third quarter of 2022, office supply totalled 5.68 million sq m, a 0.5% decrease from the second quarter due to the supply withdrawal of three towers. The take-up rate rose significantly from 80,000 sq m to 147,000.
At the same time, the vacancy rate also increased considerably from 36,000 sq m to 103,000 sq m. The positive net absorption of 44,000 sq m in the third quarter changed little from the second quarter.
All grades demonstrated a positive net absorption except grade C.
The best performing segment was grade A, with the occupancy rate increasing by 1.3% quarterly. The occupancy rate for grade B also bounced back by 1.2% to reach 80%.
Grade C, the least sensitive segment over the past two years, underperformed the other categories but still reached an occupancy rate of around 80%.
Super prime buildings, the top 10 office buildings ranked by average asking rents, had a higher occupancy than grade A buildings, capturing 60% of demand over the past 10 years.
In the category of sustainable green office buildings, the net lettable area expanded by 12.7% to 992,000 sq m from the same period last year, while recording an average annual growth rate of 13.4%.
