Demand for Bangkok office space will continue at a healthy clip in the next few years, driven by the Eastern Economic Corridor (EEC) and a positive outlook for the Thai economy, says property consultancy Colliers International Thailand.
Phattarachai Taweewong, senior manager in the research department, said office space demand will remain steady at 180,000-190,000 square metres a year during 2018-20.
"In the first quarter this year, demand was driven by new businesses," he said. "Some of them set up headquarters in Bangkok to prepare for an investment in the EEC after getting a Board of Investment permit."
The Business Development Department said new businesses registered with the Commerce Ministry in the first two months rose by 11% year-on-year to 13,321.
They were mainly in construction, real estate and logistics services, spurred by economic growth prospects and government megaprojects.
Mr Phattarachai said Chinese investors sought office space in the Rama IX-Ratchadaphisek area, though supply was limited.
Colliers reported that accumulated office supply totalled 8.62 million sq m as of the first quarter of 2018.
Some 47,720 sq m of supply was added in the first quarter, with the largest amount from Krungsri Tower, a new office building on Phloenchit Road owned by Bank of Ayudhya containing 25,000 sq m used entirely by the bank.
Other supply included 6,720 sq m at Ladprao Hills near Lat Phrao Soi 4 with a rental rate of 690 baht per sq m per month and an occupancy rate of 60%; and 16,000 sq m at Ari Hills in the Ari area with monthly rent of 850 baht and an occupancy rate of 98%.
During 2018-21, new office supply is forecast at 661,550 sq m.
Most of the new office supply will be located outside the central business district, as land costs in those locations are lower than in the CBD.
Most new office supply in the CBD will be located on leasehold plots as part of mixed-use projects.
"The large amount of new office supply will challenge old office buildings," Mr Phattarachai said.
The average occupancy rate for office supply in the CBD was 95% for both Grade A and Grade B in the first quarter. The highest was on Phahon Yothin Road at 98%, while Ratchadaphisek Road saw occupancy of 92% for Grade A and 88% for Grade B.
"Some new office towers in Grade A and Grade B on Phahon Yothin and Ratchadaphisek roads had a 100% or almost 100% occupancy, as many multinational and Thai companies relocated from former offices in the CBD that had limited space for expansion," Mr Phattarachai said.