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Asia Property Report

Daily, Bangkok
Up-to-date news and coverage of industry trends and innovations from Asia with an in-depth special focus on real estate hot spots, as well as key interviews with important industry figures.

Grade A office rents 2.4 per cent

Apr 11, 2012
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The seven more mature Grade A buildings all have vacancy rates below 10 per cent with six having vacancy below 5 per cent.

A press release from CBRE Vietnam stated that while Grade A office rents continued to slip in the first quarter of 2012, it is expected that rents are approaching a short term bottom with an anticipated delay in future supply.

"Last quarter we had expected Grade A rents to stabilize in 2012,” said managing director of CBRE Vietnam Mark Townsend. "The existing Grade A buildings are filling up, and new supply was expected from Times Square, Saigon One Tower and Le Meridien. A the end of the first quarter 2012, the picture has changed considerably.”

Future supply numbers have been revised, with both Saigon One Tower and Le Meridien expected to come online in early 2013. Times Square is expected to be put into operations by the end of 2012, but the majority of this project is not office space. Times Square will provide approximately 12,000 sm NLA to the office market.

Adam Bury, senior manager of CBRE Vietname Research of Consulting said Grade A rents dipped slightly in the first quarter as landlords in the seven mature Grade A buildings sought to secure 100 per cent occupancy.

According to Bury, there is less than 4,000 sm NLA of space available in the seven buildings, and there was over 13,000 sm NLA of net absorption across the entire Grade A market in the quarter.

"With the increasing occupancy of Bitexco Financial Tower and Vincom Center, tenants looking for Grade A space in late 2012 may have few options,” said Bury.

Average quarterly Grade A absorption in 2011 was 8,500 sm per quarter and the 13,000 sm absorbed in the first quarter of 2012, continued the gains made in the fourth quarter of 2011 when 14,000 sm were absorbed.

Bury called this a "healthy improvement” for the office market. He also noted that some tenants, who were previously forced out of the CBD when rents spiraled, are now "taking the opportunity to relocate back to more prime locations.”