Demand growing for HCMC premium, mid-priced office space

By Anh Ky   April 8, 2024 | 12:09 am PT
Demand growing for HCMC premium, mid-priced office space
Premium office and apartment buildings in HCMC's Thu Thiem area in July 2023. Photo by VnExpress/Quynh Tran
Grade A and B office segments in HCMC saw lower vacancy rates and a number of large lease contracts in the first quarter, real estate consultancy Knight Frank said.

The vacancy rates were 16.7% for the premium segment and 9% for the mid-priced one, down 1.9 and 2.3 percentage points from the previous quarter.

Their average monthly rents rose by 0.3% and 0.5% year-on-year to $58.06 and $34.31 per square meter.

There were numerous large rental contracts signed during the quarter.

At The Nexus, a premium office building that opened during the first quarter in District 1, all tenants rent offices ranging from 2,000 to 10,000 square meters.

In the mid-price segment, the OfficeHaus building in Tan Phu District also saw a 10,000-square-meter lease contract.

Most of the transactions are for office relocation as many businesses opt for larger places.

There were three transactions for more than 10,000 square meters, a rare occurrence in any quarter, Leo Nguyen, director of occupier strategy & solutions at Knight Frank Vietnam, said.

Most new office buildings achieved occupancy rates of 70-80% very quickly after launch, he said.

The majority of the large transactions were by firms in the technology (75%), retail (9%) and pharmaceuticals (6%) industries, he said.

"Demand for large office spaces is increasing as foreign businesses are upscaling."

He said the soaring demand indicates the growth potential of the commercial real estate market.

This year the premium office segment will see the addition of the Marina Central Tower in District 1 with around 80,000 square meters of space.

Two mid-priced buildings, the D'Saint Raffles in District 1 and Etown Central in District 4, will also be completed with 52,780 sq.m.

Knight Frank forecast the average grade A monthly rent to climb to $60 per square meter and the vacancy rate to 27%.

The grade B segment is expected to have an average rent of $33 and 13% vacancy.

Nguyen explained: "Many office buildings in HCMC have maintained over 90% occupancy rates for several years. However, the increasing supply of office space will gradually reduce this rate in older buildings as tenants move to newer ones."

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