Office buildings have difficulty finding tenants

New office buildings have lowered leasing prices to attract tenants to fill up space given ample supply, said a property market expert.
Adam Bury, head of research and consulting for CB Richard Ellis Vietnam (CBRE), said some new Grade A office buildings needed to reconsider their leasing strategies if they wanted to attract clients.

HCM City’s tallest building Bitexco Financial Tower, for example, has 37,000 square meters of office for lease, but its occupancy is only 35 percent after its opening in November last year.

Similarly, Vincom centre on Dong Khoi Street has occupancy of 50 percent among its 80,000 square meters for lease after the building was put into service in April last year.

Some other Grade B office buildings such as REE Tower in District 4, Dragon Tower in Nha Be District and Maritime Bank Tower in District 1 that have just come into operation are still looking for tenants.

It normally takes office building owners at least two years to have the total office space filled up, especially when the supply is higher than the demand like it is now.

Office leasing prices in all grades continued to go down in the third quarter against the previous quarter. The price of Grade A office dropped slightly to $34 per square metre while that of Grades B and C is $18 and $15 respectively, according to CBRE.

This is the 8th quarter in a row to see a drop in office rent in HCM City. Prices of grades A, B and C offices have gone down by around 7 percent, 8 percent and 9.5 percent respectively from the same period last year.

Vacancy is still high despite a drop in prices, at around 31 percent for Grade A, 18 percent for Grade B and 10 percent for Grade C. HCM City now has about 1.8 million square meters of office space for lease in all grades.

Tenants seem to prefer smaller offices of less than 250 square meters each, contributing to a drop in demand, said Bury.

There was some 39,000 square meters of office space occupied in the third quarter and 120,000 square meters in the January‐September period. The figures were much lower than 220,000 square meters last year.

The office leasing prices in HCM City might fall further in the future due to current tough market conditions, according to some market observers.
Saigon Time Daily

Tags: Vietnam Property market, Vietnam property sector, vietnam real estate market