Vacancy rate for grade A offices in HCMC expected to increase to 29%
According to real estate consultancy Knight Frank Vietnam, the vacancy rate for grade A office buildings in HCMC is expected to increase from 4.2% to 29% by the end of this year. The consultancy also predicts that the average monthly rent will drop from $57 to $53 per square meter as supply increases in the Thu Thiem Peninsula in the third quarter and the central business district in the fourth quarter.
The Hallmark, The Mett, and The Nexus are among the new office buildings that will open soon, with an expected occupancy rate of 15-25%. Leo Nguyen, director of occupier strategy & solutions at Knight Frank Vietnam, expects the new supply to drive down rents at existing buildings by about 20%. Meanwhile, a recent survey by Cushman & Wakefield found that average rents in 18 grade A buildings had slightly increased since late last year. Knight Frank Vietnam also predicts that grade B office rents will decline from $34.1 to $28.5 later this year, with the vacancy rate increasing from 12.3% to 14%.
The majority of tenants in expensive office buildings are from the finance, banking, and insurance (48%), pharmaceuticals (19%), and technology (5%) sectors. As more businesses move to diversify their supply chains with a “China + 1” strategy, more tenants are expected to move into these buildings.