Growth in the domestic office market has continued this year and is set to remain at record levels well into the future after more than 7 percent growth in Grade A rents last year (Photo: vietnamfinance.vn) HCM City (VNA/VNS) - Growth in thedomestic office market has continued this year and is set to remain at recordlevels well into the future after more than 7 percent growth in grade A rentslast year, according to Savills Vietnam.
Average occupancy rates in Hanoi and Ho Chi Minh City were 92percent and 96 percent, respectively, while the gross rent reached 35.2 USD/sq.m/monthin Hanoi and 48 USD in HCM City, according to Savills’ latest publication “VietnamOffice Outlook 2018”.
The figures were relatively high compared withregional peers.
However, the enormous potential of this market wasyet to be realised as the supply of office space in Vietnam’s major cities wasless than 20 percent of that in Bangkok, Kuala Lumpur or Jakarta.
While supply was 1.6 million square metres each inHCM City and Hanoi, Bangkok had 8.6 million square metres, Neil MacGregor,managing director of Savills Vietnam, said at a recent seminar in HCM City.
Yann Deschamps, head of Workthere, a Savills business thathelps clients find flexible office space, said the upsurge of co-working spaceshas set a new milestone in the office market.
The number of co-working spaces in Vietnam rose by62 percent last year, driven by growth in start-ups and the need forcost-effective spaces, he added.
The first half of this year saw record occupancyof office space, strong tenant demand, limited new supply and rapidly growingrents, according to Savills.
Vietnam’s flexible space market is still at an early stage.The supply of flexible space in Vietnam has soared since 2017 with many localoperators opening their doors to occupiers, according to the Jones LangLaSalle (JLL) Vietnam Co Ltd’s press release on October 3.
Since 2018, the Vietnam market has welcomed moreforeign flexible space operators such as Kloud, CEO Suites, The ExecutiveCentre and WeWork – which will open its first outlet in December 2018.
There is a divergence in space requirementsbetween local and international operators. While local operators tend to locatetheir flexible space facilities in Grade B or lower grade office buildings,international operators often seek higher-grade buildings that match theirproduct quality.
“Currently, demand for flexible spaces come mainlyfrom start-up companies that prefer shorter and flexible lease terms as well ascorporations looking for temporary spaces,” Stephen Wyatt, country head of JLLVietnam, said at the release.
“The start-up community in Vietnam is growingfast, due to the positive economic outlook as well as increased funding fromthe private sector and government-led programmes. We expect these favourablemarket fundamentals to persist in the near term and expect the demand forflexible space to follow an upward trajectory in the future,” he said.
However, some co-working operators have found itchallenging to retain tenants. Some short-term tenants tend to shift to newerspaces while some larger tenants upgrade towards medium- and long-term leases,said Wyatt.
Due to the high demand, rents have increasedslightly, and projects likely to come into the market next year are alreadyquoting higher than current average rates with the promise of good amenities.
Supply will be limited in 2019 but more grade B officebuildings will hit the market a year later.
The limited supply of office space has createdfavourable conditions for other solutions like flexible space. –VNS/VNA
Average occupancy rates in Hanoi and Ho Chi Minh City were 92percent and 96 percent, respectively, while the gross rent reached 35.2 USD/sq.m/monthin Hanoi and 48 USD in HCM City, according to Savills’ latest publication “VietnamOffice Outlook 2018”.
The figures were relatively high compared withregional peers.
However, the enormous potential of this market wasyet to be realised as the supply of office space in Vietnam’s major cities wasless than 20 percent of that in Bangkok, Kuala Lumpur or Jakarta.
While supply was 1.6 million square metres each inHCM City and Hanoi, Bangkok had 8.6 million square metres, Neil MacGregor,managing director of Savills Vietnam, said at a recent seminar in HCM City.
Yann Deschamps, head of Workthere, a Savills business thathelps clients find flexible office space, said the upsurge of co-working spaceshas set a new milestone in the office market.
The number of co-working spaces in Vietnam rose by62 percent last year, driven by growth in start-ups and the need forcost-effective spaces, he added.
The first half of this year saw record occupancyof office space, strong tenant demand, limited new supply and rapidly growingrents, according to Savills.
Vietnam’s flexible space market is still at an early stage.The supply of flexible space in Vietnam has soared since 2017 with many localoperators opening their doors to occupiers, according to the Jones LangLaSalle (JLL) Vietnam Co Ltd’s press release on October 3.
Since 2018, the Vietnam market has welcomed moreforeign flexible space operators such as Kloud, CEO Suites, The ExecutiveCentre and WeWork – which will open its first outlet in December 2018.
There is a divergence in space requirementsbetween local and international operators. While local operators tend to locatetheir flexible space facilities in Grade B or lower grade office buildings,international operators often seek higher-grade buildings that match theirproduct quality.
“Currently, demand for flexible spaces come mainlyfrom start-up companies that prefer shorter and flexible lease terms as well ascorporations looking for temporary spaces,” Stephen Wyatt, country head of JLLVietnam, said at the release.
“The start-up community in Vietnam is growingfast, due to the positive economic outlook as well as increased funding fromthe private sector and government-led programmes. We expect these favourablemarket fundamentals to persist in the near term and expect the demand forflexible space to follow an upward trajectory in the future,” he said.
However, some co-working operators have found itchallenging to retain tenants. Some short-term tenants tend to shift to newerspaces while some larger tenants upgrade towards medium- and long-term leases,said Wyatt.
Due to the high demand, rents have increasedslightly, and projects likely to come into the market next year are alreadyquoting higher than current average rates with the promise of good amenities.
Supply will be limited in 2019 but more grade B officebuildings will hit the market a year later.
The limited supply of office space has createdfavourable conditions for other solutions like flexible space. –VNS/VNA
VNA
