Bangkok office leasing volume reaches 7,200sqm in Q3

Half of the deals are flight-to-quality transactions.

Prime net absorption in Bangkok’s office property market totalled 6,500 sqm in 3Q22, according to a JLL report. As the market recovered, a number of occupiers have begun upgrading their spaces by relocating into recent completions such as The PARQ and Mitrtown Office Tower. This, in turn, resulted in large vacant spaces in aged buildings.

“Known leasing volume in 3Q22 totalled approximately 7,200 sqm, with half being flight-to-quality deals and the rest being new lets. A key notable deal was the joint venture between the landlord of Park Silom and The Great Room to open a new centre,” the report added.

Here’s more from JLL:

There were no new completions in the quarter. Total prime stock stood at 1,472,800 sqm.

Prime vacancy rate in the Central Business Areas (CBA) slightly compressed to 18.3% in 3Q22.

Rents pick up as demand soars

Prime gross rents grew by +2.8% y-o-y to THB 936 per sqm per month. Most landlords no longer offer significant discounts or incentives since the market began to recover.

Capital values remained high with a small growth of +0.3% q-o-q and +4.3% y-o-y. Market yields remained stable at 5.4%.

Outlook: Supply surge to be a key vacancy driver

Looking ahead to end-2023, pre-leases among upcoming supply will likely become more solid. Vacancy rate should improve slightly to 17.5% in 2022, before picking up in 2023 after a supply influx.

Rents should pick up significantly in 2023 when a wave of high-quality supply enters the market. Investors from other cities in the Asia Pacific region have continued to show interest in office investment in Bangkok.