Reasons Why Customers Choose The Suburban Area to Rent an Office
The office rental market tends to shift to areas outside the city center when new supply is concentrated in the suburban district. Why is there this supply shift?
The central area has high rents and less vacant space than the suburban area
In the context of increasingly scarce and expensive land in the central location, and decreasing vacancy, the supply of primary office space has been limited for more than 5 years. The market has solved the shortfall with secondary supply in the periphery.
In recent years, along with the significantly improved transport infrastructure, the wave of residents moving to non-central areas also affects the office selection strategy of businesses.
The quality of suburban offices is becoming more and more outstanding
The quality of non-central office buildings is increasingly superior to old projects in the area or similar to buildings located in central locations. Investors who understand the needs of tenants have brought many office building projects of outstanding quality with modern design and smart furniture to provide a workspace experience no less than buildings and offices in the center.
Offices for lease in the periphery have many Grade A office buildings, high-class Grade B offices, but the rent is better than other buildings in the same segment in the city center, making it attractive to customers for these projects increases.
Therefore, the trend of drifting to the edge and moving to the periphery is growing stronger as an effective solution for businesses, especially in the post-epidemic recovery period.
The suburban’s abundant supply of offices far from the center
The office leasing market has gradually revealed a trend of moving to areas outside the city center in the last 2 years, when the shopping basket continued to increase with 42,300 m2 of new supply, all concentrated in the suburban district, of which 55 % in Go Vap and Thu Duc areas. Recently, new office leasing transactions have also taken place strongly in the central fringe area such as an office for lease in District 9.
Office buildings in the suburbs are newly built and leased in a variety of areas such as 40 – 80m2 suitable for small companies, 100m2 – 250m2 suitable for companies with many employees, and an area of over 1000m2 for large corporations and companies. Office buildings outside the city center offer a variety of rental areas to meet the needs of any company.
The shift in tenant structure between the center and the suburban area
The final factor influencing this trend is the availability of demand for the office market and a shift in tenant structure. The epidemic promotes a shift in tenant structure, changing the demand for beautiful and convenient locations to areas far from the center.
In the past, when the main customer groups of the office market such as real estate, finance, banking, education, etc. always needed convenience in trade, the location in the central area was always an advantage prerequisite for them. However, when there is a structural change due to the epidemic, as an inevitable change of the market, many tenants have switched their services to digital platforms, fintech, IT… This customer is increasing.
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