Existing office owners urged to step up offerings
With tremendous future supply of office space from planned mixed-use projects in Bangkok, existing office owners should maintain and improve their buildings to compete with the new supply, urge industry experts.
Nithipat Tongpun, executive director and head of office services at property consultant CBRE Thailand, said 2 million square metres of office space are under construction and expected to be completed between 2020 and 2026.
"The market is unlikely to see any oversupply unless such developments are completed at the same time," he said. "Owners of old office buildings should improve common areas and add more facilities that support tenants and employees who work in the building."
Mr Nithipat said developers of new office buildings need to conduct market research and surveys on tenant requirements to develop buildings to attract them.
"Office buildings should have facilities for work-life balance and convenient access, particularly with mass transit lines," he said. "Flexible working hours is also key to drawing talented millennials."
Yupa Sathienpabayut, head of office leasing at JLL Thailand, said older office buildings may see some negative effects because almost all of the new office development projects that are in the pipeline will be of very high quality.
Some project such as One Bangkok will be built with LEED (leadership in energy and environmental design) and WELL (leading tool for advancing health and well-being in buildings) platinum standards, possibly necessitating a new premium grade asset class.
"These buildings are therefore likely to better attract leading conglomerates and multinational companies," she said.
In order to maintain competitiveness, owners of older buildings must ensure their assets are well managed and improve over time, said Ms Yupa.
"One key advantage some existing owners of older buildings have is a prime location in the central business area, with proximity to mass transit stations. Most of these locations cannot accommodate new development projects," she said.
Despite their older age, these buildings can stay competitive when landlords adopt appropriate strategies. Renovation, a critical element in improving competitiveness, has worked wonders at office buildings such as Sindhorn Towers, said Ms Yupa.
Though the considerable amount of future supply may make some developers less confident in developing new office projects, she said the window of opportunity remains open.
"While basic requirements of tenants include efficient space, convenient accessibility, ample parking space and some retail support, different groups of tenants may have other specific requirements, such as proximity to their customers or their business peers," said Ms Yupa.
The success of a new development project will rely on the ability of the developer to understand who their target customers are, what their customers require and then to deliver products that suit their needs, she said.