Vietnam’s office market is expected to become more vibrant
The office market in Ho Chi Minh City tends to prosper and become bustling again as many new office buildings will join the race at the end of 2023. New offices are diverse in quality and location, from central to near-central such as Thu Thiem or even in more remote areas, such as the office for lease in Saigon Hi Tech Park project – OneHub Saigon. Promising that the upcoming market will be competition between Grade A office projects, as office standards are increasing to attract businesses.
The vibrant office market in Ho Chi Minh City
The office market in Ho Chi Minh City is becoming more vibrant with the entry of two new office towers in Thu Thiem new urban area with a floor area of up to 85,000 square meters. According to some industry experts, the market will remain vibrant until the end of 2023 when many office towers in the city center will come into operation in the near future.
Ho Chi Minh City’s office market is rekindled with “new recruits” joining the game
According to CBRE Vietnam’s assessment, these two new office towers belong to the Grade A office segment, strategically located in an area near the city center, and both have green office certification.
Ms. Pham Ngoc Thien Thanh, Deputy Director of Research and Consulting at CBRE Vietnam Department, said that the city’s office market will soon become more vibrant in the context that the market has been waiting for real quality supply for a long time, especially in the Grade A office segment.
Additionally, to pursue quality standards related to construction and operation, investors also pay special attention to green criteria to ensure quality of life for those working in office buildings. This is a prerequisite to attract and retain major clients and multinational corporations.
This means that old or degraded Grade A office buildings that due to prolonged usage need to be renovated to be able to stay resilient in the current competitive market. The wave of decentralization also helps suburban projects such as office for lease in Saigon Hi Tech Park – OneHub Saigon gain attention with affordable rents but with quality not inferior to Grade A buildings in the central businessdistrict.
The increasingly higher standards of office buildings are meeting the demands of tenants
This shows that new office buildings with high standards in favorable locations still attract the attention of businesses, especially multinational companies. CBRE said that due to new supply, the total office area in Ho Chi Minh City has reached approximately 1.6 million square meters of floor space.
Analysis of office rental transactions in the third quarter
According to Ms. Duong Thuy Dung, Head of Valuation, Research and Consulting at CBRE Vietnam, most significant leasing transactions in the third quarter took place in new buildings, completed after 2020. Total area for New leasing of both Grade A and B offices in the third quarter was about 24,000 square meters, which is a very positive level since the beginning of this year.
Based on CBRE Vietnam’s transaction statistics in the third quarter, transactions related to decentralization and contract extensions still account for the majority, about 80% of the total number of transactions performed. Following this trend were transactions for office expansion with 13% of the total transaction volume. According to statistics, pharmaceutical companies and flexible workspaces are the main customers in office expansion transactions because they are less affected by the economic recession.
Decentralization and contract extension accounted for 80% of total office transactions in the third quarter
Meanwhile, for many industry groups such as retail, e-commerce and real estate, the difficult economic context has forced many businesses to narrow their premises, especially startups in the recent stages. The manufacturing industry group is the industry group with the most demand for rental space in terms of quantity, but the proportion of rented space is not high, so it does not create a big impact on the market. The industry groups with the largest office space are still traditional ones that need a lot of space such as finance, banking or insurance.
Challenges and prospects
Challenges from increased new supply
Experts indicate the new supply also means increased competition, pushing the vacancy rate of Grade A offices from 7.5% to nearly 20%. Furthermore, landlords are also cautious about rental pricing decisions that have to come with many incentives to attract or retain customers.
In the difficult economic context expected to last until the end of the first quarter of 2024, this caution is necessary as the supply of Grade A office space continues to increase in the coming years. The measures to support customers such as maintaining, reducing rental price, upgrading equipment, building management team, etc. are factors that office landlords need to consider and implement to enhance competitiveness in the market with more and more high-quality new supply sources.
Read more: How does a building with a large floor area attract attention in the market?
Old offices need to be upgraded to increase competitiveness with new offices with high-quality new supply standards
According to Trang Le, Senior Director of Research and Consulting Services at JLL Vietnam – a renowned real estate service provider, the end of 2023 and the beginning of 2024 will continue to witness a great competition from new waves of projects launched. Despite being a locale that attracts the top tier Grade A customers in Vietnam, Ho Chi Minh City’s office market is expected to return to balance in negotiations between landlords and tenants.
Prospect of Ho Chi Minh City’s office market
It is forecasted that by 2024, the office real estate market in Ho Chi Minh City may return to a positive development trajectory when the economy gradually becomes more stable. With the city’s strong economic potential as well as abundant labor supply, the favorable business environment will be able to attract more domestic and global investors, especially multinational corporations.
The office market is no longer sluggish as it was at the beginning of 2023
With a diverse supply from quality to the rental price, businesses will have more options while investors will also have to increase the quality of building to attract customers. Not only in near-central areas like Thu Thiem are there Grade A offices, suburban also have many quality projects such as office for lease in Saigon Hi-Tech Park OneHub Saigon in East Saigon.
Office for lease in Saigon Hi-Tech Park OneHub Saigon
OneHub Saigon is an office for lease in Saigon Hi-Tech Park that is attracting a lot of attention in East Saigon. This is a very large-scale project with 7 office towers integrating many auxiliary multi-functional works. The building at OneHub Saigon achieved Grade A quality, but the rentis more affordable compared to central or near-central areas like Thu Thiem. Aligning with the global trend of decentralization – businesses moving offices to suburban areas – OneHub Saigon is a great office project.
Office for lease in Saigon Hi-Tech Park – Onehub Saigon
OneHub Saigon possesses many advantages that are challenging for office buildings within the city center to achieve. The first is the green space outside the campus-style office, a significant advantage of this project owing to its expansive land area and low building density. The vast lush greenery provides space to organize collective activities, entertainment, relaxation or sports for those working in OneHub Saigon. As work pressure increases with the trend of human development, spaces for outdoor activities will help employees balance their lives, health and spirit.
Another advantage of the office for lease in Saigon Hi-Tech Park – OneHub Saigon project is its convenient traffic connection. Connecting to Hanoi Highway, moving from OneHub Saigon to the central business district takes just over 25 minutes. In addition, the Metro 1 project coming into operation in 2024 also has stop number 12 directly connected to the OneHub Saigon project, promising commuting convenience for people working in OneHub Saigon. Besides, upon completion, Ring Road 3 will also help connect this office for lease in Saigon Hi-Tech Park to highways easily.
OneHub Saigon – Grade A quality office for lease in Saigon Hi-Tech Park
Conclusion
The third quarter to the end of 2023 promises to be an exciting time for the office market in Ho Chi Minh City as many new offices will participate in the market. Investors and landlords need new strategies to compete in an increasingly competitive market. Transactions in the third quarter were mainly decentralized thanks to new projects with good quality and reasonable rental prices such as office for lease in Saigon Hi-Tech Park – OneHub Saigon.
Learn more: What are the advantages of offices located near Metro Line 1?
