Bangkok office market to take years to recover, experts warn
The oversupplied Bangkok office market will take at least five years to return to a balanced state, with several projects postponed without a definite timeline, according to property consultancy Cushman & Wakefield.
Aukit Pronpattanapairoj, head of office leasing, said the oversupply in Bangkok’s office market has led to construction delays for some new projects and more intense price competition among newly launched ones.
“The projects that have postponed construction are mostly large-scale developments, with a combined lettable area of at least 200,000 square metres, which were previously expected to add new supply between 2025 and 2028,” he said.
The largest supply would come from One Bangkok on Rama IV and Wireless roads, offering 150,000 square metres at Signature Tower, which, at a height of 430m, will become the tallest building in the country on completion. The project was originally scheduled for completion in 2028.
Another project is phase two of The Parq on Rama IV and Ratchadaphisek roads, contributing 50,000 sq m, which was initially planned for completion between 2024 and 2025.
Both projects have delayed construction indefinitely as they need to fill existing supply within their developments first.
Due to the oversupply, price competition to attract new tenants and retain existing ones has intensified, with discounts reaching up to 30% among new projects completed in the past two years.
Some office landlords are also offering 6-7 months of free rent for three-year contracts, Mr Aukit added.
“In a healthy market, discounts were typically only 10-15%,” he said. “On the demand side, office occupiers are downsizing, streamlining, and restructuring their organisations, reflecting a global trend.”
Among them are IBM, which reduced its space from 7,500 to 3,500 sq m; Microsoft, from 2,000 to 1,500 sq m; and Ericsson, from 3,700 to 2,000 sq m.
As of the end of 2024, Bangkok’s office supply tallied around 8.78 million sq m, with a vacancy rate of 27% — the highest since the post-1997 financial crisis, which saw a vacancy rate of 36%. In contrast, the lowest vacancy rate was recorded in 2021, at just 3-5%.
Approximately 56%, or around 4.97 million sq m, is located in the central business district (CBD) areas, with supply expected to increase further as about 387,000 sq m are slated for completion between 2025 and 2027.
The top three locations facing challenges in this situation are in the outer CBD, including Bang Na, due to low demand; Ramkhamhaeng, due to the delay of the Orange Line mass transit; and Phaya Thai-Vibhavadi, due to its less attractive location.
“By 2030, the Bangkok office market is expected to return to a balanced state, with the vacancy rate predicted to drop to 15-20%,” Mr Aukit said. “However, this will largely depend on global economic conditions, which impact office tenants, most of whom are Japanese and American firms.”
Source: https://www.bangkokpost.com/property/2967341/bangkok-office-market-to-take-years-to-recover-experts-warn
