BKK sees lower office rents

The deterioration of Bangkok’s office rental rates arrested in the first quarter according to Knight Frank Thailand’s research.

Bangkok’s overall vacancy rate now stands at 12.37 per cent, up from 12.07 per cent in the fourth quarter 2009, with the highest vacancy rates recorded in the market’s second largest sector by size (Grade A), which is a now reporting an average vacancy rate of 14.91 per cent.

This indicates that there is a decline in demand due, the company believed, to the uncertainty created by ongoing political unrest, but the pace of this decline has been slowing.

Grade A and Grade C rents showed very minor falls from the fourth quarter 2009, standing at Bt634 and Bt349.9 per square meter respectively and even a very slight improvement in the resilient Grade B sector, which saw rents grow from Bt469.58 to Bt497 per square meter, effectively halting the decline in the overall average rental rates that we witnessed throughout 2009.

In conclusion there does seem to be an emerging trend of a deceleration in the decline of office rents and vacancy rates, which is encouraging and may even be an early indicator pointing towards a potential return to improving occupancies and rental growth, but this only possible if the service sector can enter a recovery phase.

In the immediate term, levels of new demand stemming from relocation, expansions and new start ups continues to fall as business confidence suffers from the on-going political turmoil, the research said.

SOURCE: The Nation