New construction keeps office rents in HCMC in check
New supplies of offices for lease in HCMC in the third quarter of this year kept office rents, especially Grade A offices, from rising further, according to property service provider CB Richard Ellis (CBRE) Vietnam.
HCMC’s office market welcomed three new office buildings in the quarter: Lim Tower 3, a Grade A office building, and two Grade B office buildings, Sonatus Building and Etown 5, with a total area of offices for lease of nearly 82,700 square meters.
Thus, the total area of offices for lease in the city increased to more than 1.3 million square meters, including more than 414,100 square meters of Grade A offices in 16 buildings and 894,200 square meters of Grade B offices in 65 buildings.
In the third quarter, the average rent of Grade A offices was recorded at US$46.6 per square meter per month, up only 2.4% year-on-year and down 0.3% over the previous quarter.
Duong Thuy Dung, senior director of CBRE Vietnam, pointed out that even though the number of new Grade B offices had doubled that of Grade A offices, the Grade B office rent had increased by a slight 2.7% over the last quarter and 5% over the same period last year.
The large addition of new offices caused vacancy rates for both segments to increase. Grade A vacancy hit 8.2%, while that of Grade B reached 5.8%, up four percentage points year-on-year.
According to CBRE, from this quarter to the end of 2020, HCMC expects to have an additional 190,000 square meters of offices in 10 buildings, including two Grade A buildings and eight Grade B buildings.
Meanwhile, the rent of Grade A offices is expected to increase slightly next year, at 0.6%. However, the rent of Grade B offices may increase further in the next few years, at 2% per year.
Technology and flexible workspaces will continue to dominate the office demand in HCMC thanks to the boom in new startups and technology in recent years.