Bangkok 2024 office take-up hits record high in five years

Full-year absorption reached 107,200sqm.

Prime net absorption in Bangkok’s office sector totalled 19,500 sqm, according to a JLL report. Demand from recent and new projects dominated the market, while mid-aged buildings saw occupancy drop. 

Full-year volume reached 107,200 sqm, surpassing pre-pandemic levels.

Here’s more from JLL:

Gross leasing volume rebounded to a healthy 21,800 sqm, recovering from a two-year record low. Most leases were “flight-to-quality” relocations.

High vacancy rates persist due to continuous supply influx

Grande Centre Point Lumphini commenced operations in Q4 2024, adding 10,000 sqm to the market. Total prime office stock in Bangkok’s CBA increased to 1,571,300 sqm.

The Prime’s vacancy rate compressed slightly to 28.9%. This marked a decrease from a 24-year peak of 29.7% recorded in Q3. However, the rate is expected to remain high in the near-term, mainly due to the ongoing supply influx and limited demand for expansion.

Flat rents pressure yield compression

Prime gross rents remained at THB 1,027 per sqm, per month, up by 6.7% y-o-y. While most buildings saw stable rents, recent completions with high occupancy increased asking rents. Net effective rents, likewise, grew by 6.6% y-o-y, to THB 786 per sqm, per month.

Capital values continued to rise, up by 0.8% q-o-q and 8.5% y-o-y to THB 168,300 sqm. With rising land and construction costs outpacing rent growth, the prime office market yield contracted slightly, by 5 bps to 5.60%.

Outlook: Positive demand and rent growth expected, albeit with high vacancy

Total office stock is projected to reach 1.8 million sqm by end-2025. Pre-leases in recent and upcoming projects are likely to dominate market activity. The vacancy rate is expected to compress marginally but remain high at 28%.

While rent declines are expected among aged buildings as market competition intensifies, the overall market expects a rent increase in line with a premium supply influx. High development costs should boost capital values, with older assets seeking refurbishment.