What drove Bangkok’s retail vacancy rate to rise to a three-year high in Q1?

The vacancy rate for prime retail spaces increased to 5.2% in Q1.

The prime retail vacancy rate in Bangkok increased by 51 bps q-o-q to 5.2%, according to data from JLL. The analyst said this uptick stemmed from resumed tenant reshuffling and the market’s ongoing absorption of new supply from large-scale projects opened at the end of 2024.

“No new supply was recorded in Q1 2025. The market remained dynamic, particularly in decentralised areas, with significant ongoing renovations and a pipeline of large-scale projects, more than half of which were expected to be completed by the end of 2026,” JLL said.

Here’s more from JLL:

Bangkok’s prime retail sector experienced a slowdown in leasing activities, recording a negative net absorption of 20,000 sqm. This fluctuation was a result of strategic tenant reshuffling and renovation activities, rather than a market downturn.

Demand from international brands remained robust, with approximately 100 deals recorded in Q1 2025. Luxury brands continued to expand in tourist-centric malls, while mass-market fashion, F&B and household tenants maintained strong growth across the market.

Modest rental increases limit capital value growth

The market recorded a minimal increase in gross rents of 1.4% q-o-q. This deceleration, compared to the high growth of the past two years, was driven by subsiding post-pandemic recovery tailwinds and the absence of new project completions.

With minimal supply movement, demand fluctuations and modest rental growth, capital values saw only a marginal increase, while market yields remained stable during the quarter.

Outlook: A challenging year amid high competition and demand uncertainties

High competition in Bangkok’s retail market is expected to continue, with supply pressure from the introduction of new and refurbished centres across all segments likely to drive innovative retail concepts as developers strive to differentiate their offerings.

The market is set to face another challenge from a disrupted tourism recovery due to security concerns and earthquake effects. As Thailand’s economy and retail sector are heavily reliant on tourism, this could impact the near-term growth across the prime retail market.