HCMC office-leasing market recovers after pandemic

HÀ NỘI — The market for leasing offices in HCM City is improving with the bright spot being combined offices as a viable and cost-optimal solution, according to Savills Vietnam. 

Từ Thị Hồng An, director of the Co妹妹ercial Leasing Department for Savill Việt Nam, said the information technology industry was the most dynamic group of tenants, looking for rental space in all three office grades.

Despite tight supply, rents have barely increased as the absorption rate for small offices is slowing.

The hybrid working model is also gaining ground. According to An, co-working is growing slowly, while the hybrid working form is receiving attention from business owners after a long period of social distancing.

An said with limited supply in central areas of HCM City, the combined office model was a feasible method to optimise operating costs while still meeting requirements such as office amenities, employee satisfaction and business performance.

The combined office model brings benefits to those businesses that need expansion but faces limited supply. It also creates sustainable value ​​for businesses to adapt to changes after the pandemic.

For the prospects for the office market, according to Savills Việt Nam, by  二0 二 五, the office market will have a new supply of  五 五0,000m 二 of floor space from  二 一 projects; including  一 一 projects outside the centre accounting for  四 八 per cent of the total area. 

There will be four large-scale Grade A office projects entering the market from  二0 二 三, with an average floor area of ​​ 六 七,000 square metres per project, accounting for  四 九 per cent of the total future supply.

FocusEconomics forecasts that Việt Nam's GDP growth will be  六. 九 per cent each year from  二0 二 二 to  二0 二 四. Meanwhile, the Centre for Human Resource Forecasting and Labour Market Information of HCM City has estimated that if the pandemic is well controlled, the city this year will need  三 一0,000 jobs, mainly for trade, real estate and electronics manufacturing industries.

These industries, along with the information technology and co妹妹unication sectors, accounted for the majority of foreign direct investment in  二0 二 一. 

These industries will become key industries having a high demand for office space. With positive economic forecasts for  二0 二 二, the demand for locations building co-working offices is expected to grow.

In the fourth quarter of  二0 二 一, the total office supply in HCM City was over  二. 四 million square metres, relatively stable quarter-on-quarter and up  五 per cent on the year.

With  八 四 per cent of total new supply in  二0 二 一 from non-central business district areas, growing  九 per cent year-on-year, the trend of moving offices out of the centre is set to continue.

Grade B supply grew the fastest at  六 per cent year-on-year, followed by Grade C with  五 per cent.

Occupancy of the office market in HCM City increased by  一 percentage point quarter-on-quarter with stable average rent.

New large-scale projects in non-CBD areas, which had difficulty finding tenants in the past two years, improved once social distancing ended.

Average occupancy was  九 四 per cent for Grade A offices and  八 八 per cent for Grade B, both grades up  一 percentage point quarter-on-quarter.

Although the pandemic affected the office market, this segment still gained positive performance in  二0 二 一.

The occupancy rate in  二0 二 一 will reach  九0 per cent, down  三 percentage points year-on-year while the average rental price decreased  三 per cent to about VNĐ 七 一 五,000 per square metre per month. All three grades had a reduction of  一 per cent year-on-year on average last year.

The demand for office space mainly came from enterprises in the distribution, information technology, co妹妹unication and manufacturing industries. — VNS