Offices no B grade actor

After a lengthy downturn, the light is shining on Grade B offices for lease.

Nathan Cumberlidge, associate director of the CBRE Vietnam’s office services, said occupancy rates and rents for Grade B offices for lease in Hanoi had significantly increased.

He said most net absorption was the 18,000 square metres in the Grade B Capital Tower, which has over 85 per cent occupancy, up 1.5 times from the second quarter.

According to CBRE’s third quarter report, the Grade B average asking rent was $28.20 per square metre per month, up 6.74 per cent on-quarter and about 7.6 per cent on-year.

Vacancies fell from 18 to 12.21 per cent on quarter.

Colliers International Vietnam’s third quarter report also showed that the Grade B average asking rents have risen and the occupancy rates of the segment was about 85 per cent.

Nguyen Thuy Ha, office service researcher of Colliers Vietnam, said: “Grade B buildings have good occupancy rates because of reasonable rents and the increasing demand for larger office areas in serviced buildings.”

Ha said Grade A building rents had fallen on year, but remained high at over $40 per square metre, per month.

Ha confirmed that Colliers International Vietnam had begun receiving more tenants’ requests for office spaces greater than 300sqm, with banks, energy companies and insurance providers most  interested.

Cumberlidge said: “Most existing banks would like to have more branch offices in the west of Hanoi. The demand is also coming from telecommunication, high-tech and software companies.”

“There are a few asking for office space for lease in the west of Hanoi, as compared with central business districts. However, they have requested large spaces, from 1,000 to 2,000sqm,” added Cumberlidge.

Ha said more companies were moving headquarters from Lang Ha area to larger offices in Tu Liem district.

However, while most realty experts have expressed confidence in the performance of the Grade B segment in the short-term, difficulties and challenges for office for lease developers in the long-term remain as supply will soon exceed demand.

 Colliers International Vietnam estimated that in the near future, the Grade B segment would have an addition of more than 100,000sqm in office space from projects like Viet A Tower, Newtatco and those at No.44 Hoang Hoa Tham street and No.252 Hoang Quoc Viet street.

Savills’ head of research Tran Nhu Trung said: “There will be 1.3 million square metres of office space from 99 projects within four years. It will increase pressure on office building developers’ shoulders. Some of them will have to decrease their buildings’ rents to attract tenants.”