HCM CITY (VNS)— The office leasing market in HCM City is showing signs of life, with stable rents and occupancy rates for grade-A office space, according to a report by property consulting firm CBRE Viet Nam.
Foreign and domestic companies in pharmaceuticals, law, and petroleum, among others, were enjoying expansionary phases, the report said
"As a result, we saw rents for mature grade-A buildings holding firm as occupancy levels remained stable over the past 12 months," it said, noting a "healthy" rise in the occupancy rates for new buildings.
Buildings such as Kumho Asiana Plaza, Metropolitan, Sun Wah Tower, Diamond Plaza, Sai Gon Centre, Sai Gon Tower and Centec have all maintained occupancy rates of over 95 per cent over the past 12 months.
Vincom Center, which had 51-per-cent occupancy in the last quarter of 2011, was currently at 75 per cent after landing a number of new leases.
Bitexco Financial Tower has emerged as a highly sought-after location for law firms. Multinational firms such as Allen&Overy and Zico Law have established operations in the building within the past 12 months, pushing occupancy levels up from 40 in the fourth quarter of 2011 to 68 per cent in the current quarter.
The delay of major new grade A office supply has also helped ensure the stability of the market, with a number of major construction projects delayed due to the economic downturn.
This year saw the completion of two new grade A buildings, well below the five initially expected a year ago. President Place, with 9,100sq.m at the corner of Nguyen Du and Nam Ky Khoi Nghia, and Empress Tower, with 20,000sq.m on Hai Ba Trung Street, have both been completed and are now leasing.
The Lim Tower project on the corner of Ton Duc Thang and Le Thanh Ton streets, targeted for completion in the second quarter of 2013, will put another 34,300sq.m on the market. It is already over 60-per-cent committed with Techombank Bank confirming that it will relocate its corporate headquarters to this location as the anchor tenant.
CBRE said it has received strong interest from occupiers seeking to upgrade office accommodations but currently leasing in mature buildings with limited capacity to meet expansionary needs.
Meanwhile, tighter budgets and more cautious approaches are likely to shift demand towards the grade-B office market during 2013. Within the past 12 months, grade B buildings have emerged have already emerged as desired and cost-effective options for many tenants. The Maritime Bank Tower, for instance, with 54 per cent occupancy in late 2011, has seen occupancy rates soar to 87 per cent this quarter.
The Me Linh Point Building, a B+ property, was maintaining 100-per-cent occupancy.
An Phu Plaza, at 117-119 Ly Chinh Thang Street, was completed in August and has commitments for 30 per cent of its 11,000sq.m from various multinational legal, financial and construction companies.
The average asking rent for Grade A office space as of the third quarter of this year was approximately VND642,000 (US$30.56) per square metre per month. The average rent for grade B space was VND362,000 ($17.25). Average vacancy rates for grade A and grade B office space respectively were 15.3 and 11.8 percent. — VNS