Bang Na-Trat office demand up

Bang Na-Trat office demand up

Quality of available space remains low

With office rents in Bangkok's central business district rising by 15% last year and nearly 6% more so far this year, more companies are considering Bang Na-Trat Road an alternative due to its competitive rents and convenient access to both the CBD and the Eastern Seaboard.

An office building goes up on Phloenchit Road in Bangkok's central business district. Also on the rise in this area are office rents, forcing companies to look for alternative venues for their headquarters. THANARAK KHUNTON

However, the office market in this area suffers from a severe shortage of quality office supply.

Suphin Mechuchep, managing director of Jones Lang LaSalle (JLL), said Bang Na-Trat was known predominantly as a major manufacturing and logistics hub in eastern Bangkok.

But in recent decades, the area has emerged as a major commercial location, with a number of retail and office developments lining the main road.

"While the number of major retail centres has continued to increase along Bang Na-Trat Road to serve the fast-growing residential market in this area as well as customers from central Bangkok, the area itself has seen no growth in new supply since 1994," said Mrs Suphin.

"As a result, the office market there has been dominated by home offices and ageing office buildings, many of them poorly managed and outdated in terms of specifications and facilities."

JLL's Thailand Property Intelligence Centre said the area's office market was concentrated between the Bang Na intersection and Bang Na-Trat Road km 10 and has a stock of 296,000 square metres, only 30% of which is of acceptable quality.

This shortage of quality supply has created new opportunities for property developers looking to build commercial projects in new locations outside the CBD, where land has become increasingly scarce and expensive, said JLL, a professional services firm specialising in real estate.

Demand for high-rise office space in the area has been increasing rapidly, as indicated by a declining vacancy rate, currently at 17.4% and which has fallen twice as fast as the Bangkok market average since 2010. Importantly, a number of buildings of better quality are now experiencing single-digit vacancy rates.

Yupa Sathienpabayut, JLL's office leasing director, said demand for office space in the Bang Na-Trat area had traditionally come from companies needing easy access to  both the CBD and the Eastern Seaboard as well as Suvarnabhumi airport.

Today, this area is attracting companies from a wider variety of industries looking to take advantage of relatively low rents and improved infrastructure, with many of these companies choosing to locate their back office functions in the area, she said. This trend is continuing as rapidly rising rents and limited supply in the CBD force more companies to consider secondary locations.

Ms Yupa said average rents along the road had risen from 287 baht per sq m per month in 2010 to 389 baht now, a 35.5% rise. The overall market has risen by 23%.

Do you like the content of this article?
COMMENT