City office space in short supply

Demand for Bangkok's office space is expected to continue to grow throughout this year because supply is relatively small, according to Knight Frank Chartered (Thailand).

Three new office buildings will be completed this year, but two will be located outside the central business district on Ratchadaphisek and Vibhavadi Rangsit roads.

As the total amount of space is relatively low, the new offices should easily be absorbed by current levels of demand, said Marcus Burtenshaw, executive director at Knight Frank.

Due to limited supply, rents will increase across Bangkok, with Grade A buildings in prime locations enjoying the highest rises, he added.

According to the property consultant's research, Bangkok's office occupancy rate has improved since the second quarter of 2011.

The most significant improvement was seen in the Grade A sector. The rise in occupancy rates coincided closely with the 2011 general election, which marked a return to peace and relative political stability with a positive impact on business confidence.

The overall occupancy rate has improved to 87.74%, confirming that office demand remains healthy and continues to favour buildings located close to mass transit stations.

In the fourth quarter, Grade A buildings enjoyed the highest occupancy growth of 0.45% from the previous quarter, rising 5.16% from the start of 2012.

On the supply side, Bangkok office space was unchanged at 4,630,008 square metres, a year-on-year increase of 1.88%.

The figures exclude multi-owner-occupied premises and office buildings smaller than 5,000 sq m.

Mr Burtenshaw said that while overall rental rates rose in line with demand, they are still considered stable.