Office rankings help increase market transparency

By Hoai Phong   May 14, 2023 | 11:00 pm PT
The ranking of office buildings will improve the quality of buildings and help tenants to evaluate properties accurately, ensuring reasonable rents for each segment.

According to Jonathan Flexer, deputy director and head of the Tenant Representation Department at CBRE Ho Chi Minh City, the classification of office buildings for rent will bring transparency to the market. When demand increases, developers also bring higher-quality buildings to the market by applying advanced technologies.

CBRE representatives said that countries around the world had specialized agencies responsible for ranking offices, such as the International Association of Owners and Managers of High-rise Buildings in the U.S. or the Real Estate Council of Australia, which publish standards and public guidelines.

Vietnam currently does not have any legal documents assessing the standards of office buildings, only classifying works in general. Market research units often evaluate high-rise buildings by referring to the standards and practices of international units, from which they come up with criteria suitable for the actual implementation in Vietnam.

In general, the classification usually divides the level according to the overall quality, as well as the functions and services provided to tenants of the building.

The central area of District 1, Ho Chi Minh City, gathers many grade-A office buildings. Photo by Bee Huy

The central area of District 1, Ho Chi Minh City, gathers many grade-A office buildings. Photo by Bee Huy

According to Savills's assessment, the classification of office buildings according to grades A, B, and C helps the parties in the industry have a specific framework for evaluating the quality of office buildings for rent. These standards are based on design units, construction contractors, investors, landlords, and tenants to carry out related work.

For example, design units and construction contractors are based on office standards to plan construction. Landlords use the criteria to have a suitable rental price frame. Tenants rely on that to search for office buildings that match their needs.

Diverse standards

In Vietnam, service providers such as CBRE, Collier, and Savills all classify high-rise buildings according to their own criteria, with adjustments to suit market conditions and existing buildings on the market.

Specifically, CBRE evaluates a building that meets the standard of grade-A office when it is located in the financial - commercial center of the city, and has a remarkable architectural design. These high-rise buildings will have design units, contractors, and development units that are international organizations or joint ventures. Grade A office buildings have a ceiling height of 2.65m; floor area of 1,000 square meters; a corridor width of 2 square meters or more; and a minimum of four elevators per floor with a maximum capacity of 16 people.

Meanwhile, Colliers Vietnam applies the evaluation standard system of the Australian Real Estate Council and adjusts some standards to suit the Vietnamese market. The unit classifies the grades of grade A buildings: floor area over 700 square meters; building area over 10,000 square meters with beautiful scenery, views and natural light, impressive lobby; finished and high-quality elevators; entrance and exit system close to each floor, ensuring 100% backup power, on-site management, and operation of the building 15,000 square meters; and a parking lot with one parking space for motorcycles at 19 square meters and cars at 170 square meters.

Colliers also mentioned the sustainability criterion or ESG (Environmental - Social - Governance) model to assess the impact of the building on the environment and human health.

Currently, the Vietnamese office market has many office buildings applying green certificates such as EDGE of IFC - a member of the World Bank Group, Green Mark of Singapore, LEED of the US and Lotus of Vietnam, issued by the Vietnam Green Building Council.

CBRE’s Flexer said that incorporating green certification as part of the classification system could improve the quality of new development projects while encouraging retrofitting and upgrading of old buildings. An obvious example of this trend is the development of the office market in Ho Chi Minh City.

Improving supply in HCMC

In the development plan to 2045, HCMC will develop on par with major cities in the world, becoming the economic, financial, and service center of Asia. In the future, HCMC will also be a place to attract financial institutions and international economic groups, leading to an increasing demand for high-end offices.

In recent years, many grade-A office buildings have been built with international standards and modern amenities to meet the diverse needs of businesses.

Attracting a lot of attention are Deutsches Haus, Saigon Center 2, and the Friendship Tower, mainly concentrated in the central area of District 1.

With a large floor area, beautiful architectural design and full amenities such as a security system, air conditioning system and fire protection system, these buildings become the top choice for businesses who want to locate their headquarters in the central area.

Deutsches Haus, a high-end office building built in 2017. Photo by Deutsches Haus

Deutsches Haus, a high-end office building built in 2017. Photo by Deutsches Haus

Along with the increase in demand, the supply of luxury office buildings is expanding to adjacent areas of the center of Ho Chi Minh City.

The Hallmark and The METT in the new urban area Metropole Thu Thiem, are typical examples.

These new buildings are designed with modern and convenient amenities, applying advanced technologies. With a prime location, complete infrastructure and convenient transportation, these buildings are attracting the attention of many businesses who want to locate their headquarters in adjacent areas of the city center.

Scheduled to open in June this year, The Hallmark office building has achieved the Green Mark (Gold) green building certificate of Singapore and is now getting ready to open and officially welcome tenants. The project is rated as A+ standard, the grade ranking for the highest quality office building on the market.

The Hallmark - a grade A+ office building at the gateway of Thu Thiem. Photo by The Hallmark

The Hallmark - a grade A+ office building at the gateway of Thu Thiem. Photo by The Hallmark

The tower has a total floor area of 68,000 square meters, ceiling height of 2.75 m; 100 mm raised floor and column-free design, maximizing natural light and optimizing the view. The entire exterior is covered with high-grade SYP double-layer glass 30 mm thick with insulation, soundproofing and UV protection; inside is equipped with a hospital-grade ventilation and HEPA air filtration system achieving medical standards. The passive cooling system also helps to reduce the energy and electricity consumption of the building.

A CBRE representative said the main difference of The Hallmark is the large floor area (from 1,600 to 2,300 square meters), which gives tenants more flexibility in office design.

The high-rise building also stands out with its quality finish, touchless technology, and outdoor area on the 5th floor with a green space and panoramic views of the city.

The green certifications the building has achieved are crucial in creating a difference from other buildings in Ho Chi Minh City, the CBRE representative said.

According to Colliers, in 2022-2023, the number of green buildings in the Asia-Pacific region will increase by 22%. By 2030, it is expected that up to 42% of buildings will be greened.

Starting later than Western countries promises to give Vietnam many opportunities to learn in the journey of sustainable development.

The report also assessed that the trend of building offices according to the ESG model would be increasingly explored and invested in by many investors.

Most multinational corporations have to meet ESG requirements, so ESG-compliant real estate projects are considered good investments, helping to minimize risks and optimize business efficiency.

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