Bangkok office market to continue to favour tenants
Over 1.5 million sqm of office space remains in the pipeline.
Bangkok office demand continued its expansion trend, displaying positive net absorption of 53,000 sq m in Q2 2023 according to Knight Frank data.
Over the past year, net absorption figures totaled 160,000 sq m, already surpassing pre-COVID levels. However, Knight Frank says the supply of office space continued to outpace demand, expanding by 79,000 sq m in Q2. Consequently, the overall occupancy rate experienced a decline, reaching 79%.
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Looking forward, the tenant-favoured market is expected to persist, with a substantial 1.59 million sq m remaining in the pipeline, including approximately 80,000 sq m recently added in this quarter.
Among the various trends monitored by Knight Frank, technology has emerged as a primary driving force in shaping work culture, transforming workplaces, and revolutionising collaboration processes. The integration of advanced tools and digital solutions has led to heightened productivity and seamless communication. Certifications like WiredScore and SmartScore have been introduced as the global standards for digital connectivity in the built environment.
The two certifications have gained prominence among occupiers as indicators of buildings with advanced technology infrastructure and among owners and developers as valuable tools for branding and marketing their properties. While the concepts of WiredScore and SmartScore are related, they serve slightly different purposes.
Simply put, WiredScore assesses the internet connectivity and infrastructure of buildings, ensuring they cater to the needs of tech-driven businesses and occupants. On the other hand, SmartScore evaluates the integration of smart technology and digital amenities in commercial buildings, fostering efficient and tech-savvy work environments.
In recent years, SmartScore and WiredScore certifications have gained significant popularity in the US and Europe, certifying approximately 75 million sq m of commercial space, according to the WiredScore website. However, in Thailand, these certifications are still in an early stage of adoption and implementation. Currently, there are only six certified office buildings, covering 236,000 sq m, which accounts for 4% of the current supply.
Nonetheless, it is notable that eight future buildings, totaling 632,000 sq m, or 40% of the total future supply, are planned to be certified. The evidence points to the market's shift towards embracing these certifications as technology standards for properties and a potential trend towards higher demand for tech-enabled office spaces in Bangkok.