HCMC Grade B office net absorption skyrockets to 17,764sqm in Q2

It was a huge jump from the 1,142sqm recorded in Q1.

In the second quarter of 2022, one new Grade B and three new Grade C buildings were completed, adding a total of 23,387sqm of net lettable area to the total supply in Ho Chi Minh City (HCMC), Vietnam.

According to a JLL report, net absorption in Grade A and B offices totalled 17,764sqm in Q2, a sharp increase from the previous quarter’s 1,142 sqm. The analyst adds that while overall Grade A net absorption improved slightly and mainly happened in buildings with notable vacant spaces, Grade B buildings experienced a surge in newly large leasing deals. The main demand drivers were real estate, finance, banking, and technology segments. 

Here’s more from JLL:

The average rent in Grade A&B remained resilient at USD30.7/sqm/month, stable at 0.1% q-o-q and 0.4% y-o-y. To push the leasing demand after the pandemic outbreak, landlords are keeping rents stable amid a limited new supply. Some buildings still offer numerous incentive programmes, including promotions or discounts on a case-by-case basis. Only a few buildings adjusted their rents increasing slightly, backed by gradually improving demand post-pandemic and limited space availability.

Outlook

Future supply is set to welcome five Grade B projects in non-CBD in 2H22, contributing about 78,000sqm NLA to the market. Remarkably, the construction qualities and amenities of Grade B buildings in the non-CBD area are progressively improving, even outperforming older buildings in the same segment in the CBD. 

In addition, when the pandemic erupted, many tenants transitioned to digital platforms to support the work-from-home model, and as the infrastructure system continuously improves, CBD location is no longer a prerequisite for leasing demand. Subsequently, the ongoing decentralisation trend is expected to bolster.