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Market Office for lease in Q1/2020

Market Office for lease in Q1/2020

In the first quarter of 2020, the economy was affected by the Covid-19 epidemic, however, about market office for lease in Vietnam, office rents tended to increase due to lack of supply.

Market Office for lease in Ho Chi Minh:

Office for lease in Ho Chi Minh
Total office supply and average office rent in HCMC in Q1/2020

In Ho Chi Minh City, by the end of the first quarter of 2020, the market office for lease in Ho Chi Minh welcomed approximately 68,700 m2 of newly completed office floors coming from B and C segments, helping the total office supply of each class reach over 1 million m2 of floor. However, of the newly completed 68,700m2 of office floor, only 62% were offered to the market office for lease in Ho Chi Minh, the rest was mainly used internally.

By the end of Q1/2020, market office for lease in Ho Chi Minh had two more new buildings:

  • Friendship Tower is located at Le Duan Street, District 1, with a total leasing area of ​​13,700 m2. With this new building, the total supply of HCMC office market will reach 1,370,814 m2 NLA. Friendship Tower has a rental price ranging from 45 – 47 USD / m2 / month and has been filled 50% after more than 9 months of rent;
  • Sonatus Tower, District 1, accounts for 49% of total new supply in the quarter and has been filled up to 80% thanks to good rental performance in the context of high demand facing the Covid-19.

In Q1/2020, the average rent of Grade A offices recorded US $ 44.6 / sqm / month, down 1.2% from the previous quarter and down 3.6% from the same period last year. This reduction is largely due to the transfer of some tenants and landlords in order to attract new tenants to fill vacant space.

As for the Grade B segment, as there was more new supply in the CBD and rents were higher than the average level of this segment, the average rent of the Grade B segment increased by 1.8% compared to Q4 / 2019 and increase to 7.4% over the same period last year, equivalent to 25.2 USD / m2 / month.

Most of the successful rental contracts in the quarter were negotiated before the epidemic, so the influence of Covid-19 on the total net leasing area in the quarter was quite limited. Grade A and B offices recorded 33,250sqm of new leases in the quarter, mostly from newly completed projects.

This quarter, the average vacancy rate in Grade A buildings decreased to 6.4% due to limited supply. Meanwhile, Grade B buildings recorded a slight increase in vacancy rate to 6.7% due to the impact of new supply in this segment.

Although the economy is affected by the disease, rents continue to rise. Specifically, Grade A and B rents reached US $ 30.0 / m2, up 8.1% year on year and 3.2% quarterly. Unlike retail segment, policies to support office tenants under the impact of Covid-19 epidemic only started to be considered and discussed at the end of the quarter and only for some areas. planning to be heavily influenced by pandemics.

Prospects of  market office for lease in Ho Chi Minh in the near future, most of the supply is expected to be completed in 2020, or in the completion stage, so there is no adjustment to the expected supply in 2020 compared to the with pre-epidemic. As planned, the market expects to welcome 1 new Grade A and 8 Grade B buildings in 2020, bringing the total supply of Grade A and B office to 1.5 million m2 of floor space.

New office for lease in Ho Chi Minh: https://lookoffice.vn/office-for-lease/ho-chi-minh/new

Best Office for lease in Ho Chi Minh: https://lookoffice.vn/office-for-lease/featured

Market Office for lease in Ha Noi:

office for lease in Ha Noi
Total office supply and average office rent in HCMC in Q1/2020

In Hanoi market office for lease, there was no new supply in Quarter I / 2020. Grade B continues to lead the supply of office space, accounting for nearly 66% of total supply, mostly concentrated in Cau Giay district. In the Grade A segment, Hoan Kiem is still the district with the largest supply, however, Ba Dinh District, with the market entry of Capital Place in the second half of 2020, will soon rise to catch up with Hoan Kiem District. Total supply by area.

The amount of net absorption in the first quarter was approximately 12,900m2, relatively high in the context of the recent outbreak. However, it should be noted that the net absorption recorded in the quarter was mainly due to transactions that took place before before the disease outbreak and the majority came from the newly completed building ThaiHolding, as the building was able to meet a variety of demands for rent size. Thanks to the new building, the Grade A segment also recorded a larger net absorption than Grade B in the quarter.

Regarding the Grade A and B office rents in Hanoi, a slight increase of 0.6% compared to the fourth quarter of 2019 and increased 5.8% over the same period in 2019. Due to limited supply, many buildings The house still continued to adjust with slight increase. Notably, the first quarter also recorded a higher increase in price in Grade A than Grade B (Grade B almost no increase), while in the previous quarters, Grade B achieved a better rate of increase than Grade A, This is due to the scarcity of Grade A supply and net absorption rate in the quarter.

Market office for lease prospects in the near future,  although the office market has not been heavily affected by Covid-19, the market is expected to receive indirect effects from the epidemic in the next quarter, due to the economy stagnant. Along with forecasts of economic growth in Vietnam and the world, future demand may decline compared to the previous forecast, due to companies tightening spending. This may cause some buildings to consider flexible, attractive rental policies to attract and support customers.

Grade B is expected to be more affected than Grade A, due to high competition from the abundant supply in this segment, as well as Grade B office tenants are more sensitive to economic fluctuations. Grade A.

The instability in the world economic situation and the strong influence of the Covid-19 will affect tenants’ new expansion plans and establishment in the coming time in both Ho Chi Minh & Ha Noi market office for lease. In particular, buildings with large vacant space, mostly newly completed or about to be completed in 2020, will likely have to reconsider their pricing strategy to attract tenants.

 

For Foreign companies want to start or expand businesses and look for an office in Vietnam:

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