The “Reversal” in the Current Trend of Choosing Large Floor Plate Offices
The sluggish market has led many businesses to close or scale down operations, consequently impacting the office market, especially large-floor office buildings in downtown Ho Chi Minh City. While the supply of new office spaces is increasing, the demand from businesses is decreasing. Businesses are becoming more proactive in office transactions to find the most optimal office solutions during the challenging economic period.
The Strong Contraction of Office Spaces
Since the beginning of 2023, many large-floor office buildings in the central area of Ho Chi Minh City have been experiencing vacant spaces due to businesses relocating or not renewing lease contracts after expiration. The Ho Chi Minh City Department of Construction published a report for the first half of 2023, indicating an overall real estate market contraction of 11.58%. The number of new businesses has decreased by more than half compared to the same period in 2022, and registered capital has also decreased by 64%.
Around 2018-2019, the startup boom made the office real estate market in Vietnam extremely vibrant. During this period, hundreds of thousands of projects were established by both Vietnamese and foreign residents in Vietnam, with economists considering this a potentially positive turning point for the Vietnamese economy. However, since the outbreak of the Covid-19 pandemic, many businesses, from startups to large enterprises with hundreds or thousands of employees, have had to exit the market or scale down operations, leading to a challenging vacancy situation in large-floor office buildings in Ho Chi Minh City.
There was a time when the rate of empty office floors in the central area of Ho Chi Minh City was up to 20%
Many renowned real estate consulting companies such as Savills, Cushman & Wakefield, and CBRE have reported a decline in leasing demand and a contraction of office spaces, contrary to the abundant supply in the market in the first half of 2023. According to Cushman & Wakefield’s Q2/2023 report, 90% of returned office spaces come from businesses in the real estate, banking, and technology sectors. CBRE’s Q3/2023 report indicates a 20% vacancy rate for Grade A offices in Ho Chi Minh City. Despite the high vacancy rates in large-floor office buildings, this segment will face increasingly fierce competition as many new office projects are set to become operational by the end of 2023.
The majority of current large office transactions are related to returning or relocating office spaces. This trend is particularly pronounced in the central areas of Ho Chi Minh City, where rental prices are high, and the market is heavily influenced by the wave of returning office spaces. Many businesses are opting for a ‘wait-and-see’ approach, downsizing their offices, and cutting personnel to navigate the current economic challenges.
Many companies have to close or downsize or relocate offices to save on operating costs
The trend of office contraction has been persistently ongoing since the beginning of 2023 in Ho Chi Minh City, given numerous factors affecting both domestic and global economies. Major contributing factors include the tightening of state regulations in the real estate sector, leading to the downfall of real estate businesses. New fire safety standards have added complexity, making it challenging for both existing and new large-floor office buildings to navigate through inspection and approval processes. The global economy is also entering a ‘post-Covid-19 blues’ phase, coupled with political and economic instability in various regions.
Fire prevention is still a difficult problem for many office buildings
There are numerous reasons for businesses to opt for the safe solution of downsizing to maintain their operations during the current challenging economic period. However, some businesses have chosen a different approach by seeking new ‘harbors’ outside the central area of Ho Chi Minh City.
Businesses Seeking ‘Harbors’ in the Sub-Urban Area
The primary reason prompting many businesses to relocate to sub-urban areas is likely the attractive rental prices. In peripheral areas, businesses can easily rent a large-floor office building with quality comparable to the central region but at half or even one-third of the rental cost.
Businesses are also taking a more proactive stance in the office rental market due to the abundant supply. Customers are choosing office buildings with favorable policies and attractive rental prices from landlords competing to attract clients, given the current trend of declining rental demand.
Office rental prices in the center business district of Ho Chi Minh City make it difficult for many businesses to maintain their operations
The occupancy rate in offices outside the city center is currently over 90%, demonstrating the unique appeal of these offices. The current limitation in Ho Chi Minh City lies in the transportation system in the central area, where public transportation has not been developed adequately, and the population concentration for both living and working is excessively dense. Commuting against the traffic flow to work helps reduce pressure and fatigue for employees working in offices outside the center when traveling to and from work.
New large-floor office buildings outside the center are also paying significant attention to green office standards and sustainable development. If businesses choose new office locations prioritizing cost-effectiveness, green office projects outside the center, such as OneHub Saigon, can meet these needs well. Green office standards contribute to more efficient operations, optimizing energy, water, temperature and lighting usage helping businesses save a considerable portion of operational costs.
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The East Saigon area, specifically Thu Duc City, is a new destination for many businesses
Although Ho Chi Minh City offers relatively favorable office rental prices compared to many other cities in the region such as Hong Kong, Singapore and Tokyo, rental prices in the central area remain relatively high for many domestic businesses. Consequently, projects like OneHub Saigon, located outside the city center, with high quality, comprehensive integrated services and green office standards have become promising office buildings for many businesses.
OneHub Saigon – High-Quality Offices in East Saigon
OneHub Saigon is an integrated business park in the Saigon High-Tech Park, Thu Duc City. It is highly anticipated in the East Saigon area due to its outstanding advantages and attractive rent.
Large-column-free office buildings, optimizing space usage
The large-floor office buildings at OneHub Saigon are designed to be virtually column-free, optimizing the usable space for businesses. With nearly 2,000 square meters per column-free floor, it stands out compared to many other large projects. The column-free floors at OneHub Saigon provide diverse area solutions for businesses, ranging from a minimum of 100 square meters to the entire building if needed.
A large column-free office building at OneHub Saigon
In addition to the spacious column-free floors, the interior space of the office building at OneHub Saigon provides a sense of openness and comfort for users with a 3m high ceiling and glass walls surrounding the entire building, allowing abundant natural light. Moreover, the glass and walls of the building are made from fire-resistant materials, ensuring compliance with fire safety requirements and providing a sense of safety and peace of mind for those inside the building.
Pioneering the campus office model, elevating the working experience
OneHub Saigon is built based on the campus office model that is popular among many large corporations worldwide. This model focuses on shared spaces with abundant greenery and low-rise office buildings in an area with low building density. This model prioritizes building users, and providing a healthy and comfortable working environment that is both modern and convenient.
Large low-rise office building with a high density of green space
The office buildings at OneHub Saigon are constructed to LEED green office standards, optimizing energy usage and the experience of individuals within the building. The buildings are designed for energy efficiency, allowing businesses inside to save on operational costs and enhance their overall operations. Outside the office buildings, there is green space with numerous trees, providing an area for connecting, relaxing, and engaging in physical activities for the building occupants. This is a rare advantage not often found in office buildings, especially those in the central area of Ho Chi Minh City. The office model that OneHub Saigon is pursuing will bring benefits to the working experience, as well as the physical and mental well-being of those working here.
Common space with many green trees at OneHub Saigon
Furthermore, OneHub Saigon is built as an integrated business park complementing the office buildings. The project will provide nearly all essential services such as dining, accommodation, shopping, entertainment, etc., within the project area with multi-functional buildings like a shopping and entertainment center, a combined accommodation and office area, an outdoor cafeteria, and more. Even though it is located within the High-Tech Park of Ho Chi Minh City, employees working at OneHub Saigon can still find all necessary services right next to their office buildings.
OneHub Saigon’s outdoor space
With rental costs potentially lower than Grade B offices in the city center, the experiences of space and working environment at OneHub Saigon can be considered superior, given that the project is built to the standards of a Grade A office. This will also be a positive factor in the eyes of business partners and customers while still saving a significant amount of costs.
Convenient location, connecting multiple areas
Another advantage of OneHub Saigon is its convenient location. Not only is it located at the gateway of the Ho Chi Minh City High-Tech Park, directly connected to Hanoi Highway, but this campus office project also has other significant transportation advantages.
OneHub Saigon will be directly connected to station No. 12 of Metro Line 1 Ben Thanh – Suoi Tien via a road overpass. This will be a major advantage for those working here, allowing them to commute by train when the metro project becomes operational in July 2024. In addition, the relocation of the new Eastern Bus Station to District 9 has also increased the number of bus and public transportation routes passing through the Ho Chi Minh City High-Tech Park and the Eastern Saigon area.
The location connects well to many areas of the OneHub Saigon project
Additionally, the Saigon High-Tech Park will also connect to the Ring Road 3, facilitating easier and more convenient travel to surrounding provinces or even highways. It can be seen that OneHub Saigon can effectively connect both within and outside Ho Chi Minh City, with a travel time to the city center of just over 20 minutes.
Conclusion
The ongoing waves of office downsizing and relocation in 2023 continue, leading to more vacant office properties. Meanwhile, the influx of new office supplies continues steadily, intensifying competition in the market. Many businesses with offices in the center of Ho Chi Minh City choose to relocate to high-quality, large-floor office buildings outside the center instead of downsizing. High-quality office projects outside the center, such as OneHub Saigon, are becoming the destination for many businesses due to their outstanding advantages compared to their rental prices.
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