The quantity of vacant spaces in top-class offices in downtown Bangkok will double next year, reaching the historical high since 1997, mostly due to arrival of new supply of higher-class properties. This will put pressure on the existing high-end office spaces.
The inventory of vacant spaces in Class A offices in downtown Bangkok will peak in 2023 – 2024, as new construction will activate in this sector. The expected scopes are 226,314 m2 in 2023 and 174,414 m2 in 2024.
As new supply emerges next year, the office market will see the highest inventory of vacant office spaces since 1997.
There will be demand for new offices from the current tenants who have been renting spaces for over 12 years.
These tenants occupy office spaces with a total floor area of around 4.4 million m2, which accounts for 55% of the total supply of offices in Bangkok.
Many tenants will want to move to new, higher-quality office premises. Old buildings are becoming less attractive compared to new development. Old offices will lose tenants unless they renovate and upgrade their premises.
Tenants of the current Class A offices will shift to new Class A properties. Class B tenants will move to the current Class A, and Class C tenants, to Class B. Therefore, Class C offices will suffer. The existing premises will have to be renovated or upgraded lest they lose their tenants.
19% of spaces in Bangkok’s office buildings under 20 years old are vacant. The average rent is 816 baht per m2 per month, as of the first half of 2022.
The average share of vacant offices in old buildings is 22%, while the rent is around 653 baht per m2 per month, as of the same time.
To remain competitive, office owners have to keep in touch with the latest trends, including those that emerged after the pandemic.
One of these is shifting to a hybrid work mode, as more than a half of all tenants will probably adopt the remote work policy for most of their employees by 2025. Hybrid schedules mean that many companies might no longer need offices of the same size as they used to rent before the pandemic.