Office market remains in holding pattern for Q3-2010

Nov. 2, 2010 - PRLog -- “Tenants aren’t leaving after the events in May but they are not expanding either”, pointed out Antony Picon, Senior Manager of Research at Colliers. “The glass is half full or empty, it depends on your perspective”, he added.  Occupancy and rental rates remained more or less the same as Q2 2010 albeit with variances by zone.  The Outer CBD recorded gains in occupancy of around 1% on the back of the new Airport Link.  “This could be an interesting area due to the convenience of getting to the airport”, said Mr Picon.
No new supply has been added for the year so far although two new office buildings are due to be open for occupancy in Q4 2010. Of special significance is the introduction of Sathorn Square with over 70,000 sq m and a large floorplate in the heart of the business district. “Around 73% of office buildings were supplied in the 90’s and only 13% in the last decade”, stressed Narumon Rodsiravoraphat, Senior Manager of Office Services at Colliers. “The average age of a grade A building is 13 years so we are not only seeing a large building being supplied but a much newer one in comparison to those surrounding it”, she said.

Limited transactions were recorded for Q3 and tenants seem to be waiting for the overall mood of the economy to brighten with lingering worries regarding the global economic situation and the domestic political environment according to Ms Narumon. A recent Asia Pacific tenant survey revealed that of all the countries surveyed, tenants in Thailand were least likely to relocate in the next three years. “That might change as sentiment could improve quite quickly”, she added.

One long term concern was the fact that the office market is largely dependant on the general growth in the economy rather than its own specific demand drivers. “The Board of Investment is starting to treat the service sector more seriously but a lot more can and should be done to boost this vital part of the economy”,  remarked Mr Picon. He pointed out to a general lack of confidence in Thailand’s ability to compete with its ASEAN partners
when the service sector opens up in 2015. “The industrial sector underwent a transformation in the eighties due in part to very generous BOI incentives and it is now time for the same to happen in the service sector and bring enormous benefits to the office market including the introduction of office space in other towns and cities based on development of business process outsourcing”, he added.

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Colliers International Thailand - Experienced Real Estate Property Consultants in Thailand- was established through combining the resources of the global real estate services firm Colliers International, and Pasupat Realty Co.Ltd.