Offices For Lease Will “Live Well” in 2022
The office rental market in Ho Chi Minh City is benefiting from the steady growth of new supply, thereby recording positive signs of recovery after the COVID-19 epidemic.
Figures of the office rental market at the end of 2021
According to the latest report on the real estate market in Ho Chi Minh City, in the fourth quarter of 2021, the office leasing segment experienced growth in most grades with a total market supply of more than 2.4 million m2. In particular, more than 80% of the total new supply in 2021 will come from non-CBD areas, showing that the trend of office relocation outside the center continues to take place. The capacity of the whole market continued to increase along with the average rent at a stable level. New large-scale projects located in non-CBD areas, which had difficulty entering the market and finding tenants during their 2 years of stay here, now have improved capacity after the lockdown period. Strict society is ended. The average occupancy of Grade A office is 94%, Grade B is 88%.
Although the pandemic affects the office market, the performance of this segment in 2021 will still reach a high level. The rental capacity in 2021 will reach 90% with the rental demand mainly coming from enterprises in the Distribution, Information and Communication Technology, and Manufacturing industries. These rental areas are mostly used by businesses to expand office space or establish new offices.
With that trend, co-working spaces have slow growth in supply in 2021, 3 new co-working projects are providing the market with a total rental area of 4,300m2 on a small scale. , but besides that, there are also 4 closed projects with a total area of 2,100m2.
While co-working is growing slowly, the hybrid working model is receiving attention from business owners after a long period of social distancing.
Office rental market after the quarantine
office market recovered after the gap with high demand and limited supply. Combined offices are becoming increasingly popular as a viable and cost-effective solution. The information technology industry is the most active tenant group, looking for space in all three office grades. Despite the tight supply, rents have barely increased as the absorption rate in small offices is slowing down.”
By 2025, the office rental market in Ho Chi Minh City is forecast to record an additional 550,000 square meters of floor space from 21 new projects, of which 11 projects outside the city center account for 48% of the total area. Four large-scale Grade A projects will enter the market from 2023 onward, with an average floor area of 67,000 m2/project, accounting for 49% of the total future supply. Along with that, the demand for office rental is forecasted to increase sharply when many fields are expanding to attract human resources, mainly from Commerce, Real Estate, and Electronic Manufacturing. These industries, along with the Information and Communication Technology industry, will also account for the majority of new and additional FDI in 2021, so they are likely to become key industries creating demand for rooms.
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