Growing supply to worsen Hanoi’s high office building vacancy rate

In the second quarter of this year the grade A office segment saw a 23.3% vacancy rate, up 1.8 percentage points from the previous quarter, while in grade B it remained at 16.6%, the firm said in a recent release.

While there were no additions to the grade B market, the grade A segment had three new buildings with 80,400 square meters of space: VinaComin Tower and Taisei Square in Cau Giay District and Grand Terra in Dong Da.

Leo Nguyen, director of occupier strategy and solutions at Knight Frank Vietnam, said low demand has driven occupancy rates to below 30% in some of the newer buildings.

"The Hanoi office market is moving slowly and the number of site inspection requests is less than half of what it was at this time last year."

In the second half of this year the market will add 46,000 sq.m of premium office space in the Taisei Square building and the Heritage West Lake, another new building in Tay Ho District.

The rising supply has increased competition and kept rents from rising, experts said.

Knight Frank said monthly rents for grades A and B offices in the second quarter remained almost unchanged at US$30 and $15 per square meter.

In 2025-26 more than 90,000 sq.m of new office space will enter the market in projects such as Tien Bo Plaza in Dong Da, Hanoi Hilton West in Cau Giay and Shilla Hotel in Bac Tu Liem District.

According to experts, new projects should focus on green standards and health criteria to attract tenants.

Real estate agency Avison Young and Knight Frank said multinational corporations are focusing on corporate social responsibility and environmental sustainability.

Leo said: "The emphasis on employee well-being is driving multinational corporations to seek office environments that are not only sustainable but also enhance the overall work experience."

Landlords also need a solid leasing plan that includes incentives and competitive rents, he added.