Office for Rent in Ho Chi Minh City Continues Strongly Increase
Regarding the office for rent market in Ho Chi Minh City recently, the rental demand is growing again impressively with a series of recorded transactions.
Current office for rent in HCMC
Accordingly, the office for rent market in Ho Chi Minh City is maintaining a stable performance thanks to the appearance of a new supply of Grade B offices in the South area of Ho Chi Minh City. While Grade A offices maintained occupancy rates up to 94%, the vacancy rate dropped sharply by 7.8% over the same period in 2021. Not only did the vacancy rate decrease, but office rents in Ho Chi Minh City in the same period also decreased. The third quarter of 2022 also increased by 5.2% over the same period, reaching nearly 58 USD/m2 (including service charge).
Grade A buildings in the central area are recording very high rental demand, causing rents here to increase by 4.3%, reaching 63 USD/m2 over the same period last year. Meanwhile, the rent of Grade A offices in office buildings for lease in District 7 also increased by 0.6%, reaching 34.30 USD/m2 compared to the second quarter of 2022. This area also has a relatively high rate of office vacancy, about 14.6%. This makes it easier for tenants to find offices for rent than in the central area.
With buildings for lease in Grade B, in the third quarter of 2022, the rent tends to decrease slightly by 0.1% compared to the second quarter, maintaining the level of 33.8 USD/m2. The occupancy rate of these buildings is also quite high, reaching nearly 91%. Regarding rental trends, in the third quarter of 2022, 48% of the rental demand came from the group of customers who changed locations, and about 32% had new rental demand. Large-area rental transactions, from 1,000-2,000m2, account for 70%. The group of tenants in the field of food and fashion accounts for about 17%, followed by the technology industry with about 16%. The logistics sector saw strong growth in the third quarter with rental demand accounting for 12%.
Expected office for rent in HCMC in the future
It is expected that by 2024, TP. Thu Duc and the downtown area of Ho Chi Minh City will receive more supply for both Grade A and B office segments, with a total floor area of 176,931 m2 and 127.410 m2 respectively. City only. In the coming time, Thu Duc will have more new office supplies from the Vinhomes Grand Park project in District 9. As for the central area of Ho Chi Minh City, there will not be significant changes, most of the new supply will be concentrated in the main areas. areas outside the center, especially offices for rent in the South and Northwest areas of Ho Chi Minh City.
Grade A offices could increase their rents to an average of $58/m2 across the market by the end of this year. Particularly for Grade B office space, the rent may be lowered due to intense competition, accordingly, Grade B rent will remain around 55% of Grade A office rent.
In the near future, Ho Chi Minh City’s real estate market will still be the area with the most active office for rent demand in the country. Under the pressure of scarce new supply, landlords will be the dominant party when negotiating leases. This situation will improve more in the next 2 years when the new store officially comes in. As for the present, I think that tenants need to plan to search for rental space soon to minimize costs related to office relocation, so they should look for reputable tenant representatives to promptly grasp the issues. fluctuations in supply in 2023 to take advantage of better rental opportunities and easily find the right environment with suitable rents.