CBRE report reveals office market is very much in favor of tenants.
Diverse and active both describe Hanoi’s office market in Quarter 2 and 3, according to a new CBRE report released on September 15. Diversity of supply and active transactions have made the market more mature and more developed in terms of both quality and quantity.
Now is a good time for Hanoi residents to consider relocating due to the range of supply and rents now reflecting the quality and services in a particular building, according to Mr. Greg Ohan, Senior Director of CBRE Brokerage Services.
“Moreover, it is time for tenants to negotiate,” Mr. Ohan added. “This is completely opposite to Ho Chi Minh City, where it is hard for a tenant to find 1,000 sq m of office space and rents have started to go up.”
Since early 2014 developers in Hanoi’s CBD have become more aggressive in offering attractive rental rates for new customers and in lease renewals so they can achieve or maintain higher occupancy rates. This puts pressure on all developers in in the Midtown area (Dong Da and Ba Dinh districts) and the West.
Rents have fallen 10 - 20 per cent depending on the segment and the area. The strategy has so far proven to be correct. Buildings in the CBD have gradually achieved their goal of near-full occupancy, maintaining stability and attracting good brand names and long-term tenants.
The West of the capital is still the preferred choice of big occupiers and South Korean companies, creating a private and competitive community. Rents have remained stable and developers must quickly fill up their buildings before new buildings are completed.
According to the CBRE report there will be approximately 106,000 sq m of office space launched by the end of this year if projects are completed on schedule and that will affect rents in other areas.
In addition to availability, tenants can now also choose office buildings that provide added value that improve the quality of the working environment, the enjoyment and satisfaction of employees, and the success of the enterprise.
In Quarter 2 and 3 of this year, based on CBRE’s transactions in particular and those in the market in general, companies and organizations in the same sector tended to move to the same area.
Pharmaceutical companies seem to be heading to the Midtown area and banks, investment funds, law firms, and consulting companies remain in the CBD and new entries still prefer the CBD. IT, telecoms, and logistic companies, meanwhile, more likely occupy the West.
“If this movement trend continues it will create a more professional market that helps companies operate more efficiently,” the report stated.