Trends influencing the premium office market in Hanoi
Trends influencing the premium office market in Hanoi
According to Savills latest market report, the office market will perform well this year with ICT and financial, insurance, real estate, and legal (FIRE) tenants leading demands. According to Hoang Nguyet Minh, senior director of Commercial Leasing at Savills Hanoi, the rent of grade-A offices will also depend on the future supply. Increasingly, tenants are selecting offices in buildings with green certificates that also cater to hybrid or agile working.
After grades A and B increases, occupancy this quarter improved by 2 percentage points compared to Q4/2021. By the end of this year, six new projects are expected with the only grade-A building being Techcombank Tower, 6 Quang Trung – an elite property in Hoan Kiem district. This project follows the opening of Capital Place, another international Grade-A building.
Hoang Nguyet Minh, senior director of Commercial Leasing at Savills Hanoi commented, “Tenants can pick from a variety of new high-quality Grade A properties that are opening soon, mostly in Hoan Kiem, Ba Dinh, and Tay Ho districts. New properties will compete with existing buildings in terms of quality, services, and pricing."
"Hanoi’s office supply is lower compared to regional peers like Singapore or Bangkok, however, the rents are lower, the quality is high, and there is great potential for economic growth. These factors mean that foreign investors are still keen on developing projects in the city, creating a healthy outlook for the premium office market,” added Minh.
According to Minh, leasing decisions are driven by green credentials and whether the space can cater for hybrid or agile working.
Certified green buildings in Hanoi include high-end properties like TechnoPark Tower and Capital Place. New properties like Techcombank Tower - 6 Quang Trung, Gelex 10 Tran Nguyen Han, 36 Cat Linh, Tien Bo Plaza, Lancaster Luminaire, and Taisei Office Building will have LEED Gold green certificates. These properties will add nearly 90,000 square metres of green office space.
Offices in green buildings have a competitive advantage compared to conventional offices in prime locations because these spaces are more than just rooms filled with desks. Therefore, occupiers often feel more productive and are more engaged at work.
The pandemic has accelerated the implementation of hybrid and agile working. According to a global survey by Savills, although the speed of adopting hybrid work differs from place to place, the transition will be inevitable in the long term.
Leading players like ICT, manufacturing, healthcare, and FIRE tenants are keen on adopting hybrid and agile working. These models differ from co-working, which is more about having a shared space and services such as concierge, security, and cleaning.
Despite its popularity, co-working has certain restraints and is more suitable for start-ups, project-based companies, and short-term leases.
Minh added, “When companies implement hybrid and agile models, they need an office with more open-plan spaces and breakout areas. Crucially, these models promote teamwork and interaction while having dedicated space for online meetings and focused work. Such offices increase productivity, and most importantly, connect people. Hybrid working will likely be adopted much faster than the co-working model as the application has broader appeal.”
At Techcombank Tower - 6 Quang Trung, the column-free floorplates promote collaboration and its air purification system also means that employees can feel safe and comfortable when they work in the office.
It will be the only office building in Hanoi’s central business district to enter the market this year and it will have a great advantage over other office buildings in Hoan Kiem which were built over 20 years ago with old designs and technical standards.
