Thai office rents rose in Q4 despite turmoil

Despite the unrest in Bangkok and falling business confidence, demand for office space in the capital managed to grow in 2013's Q4 as the market remained one of the least volatile in Asia-Pacific.

Knight Frank Thailand said occupied space increased to 4,038,166 sqm in the quarter, bringing the overall office occupancy rate to 90.3%, up by 0.64 percentage points quarter-on-quarter and 2.76 points year-on-year.

The grade-B sector had the highest occupancy rate with just 8.04% of available space. Grade-A office space saw the highest demand with a nearly 4% increase.

Office rents rose by 5.2% year-on-year. The highest increase was in grade A, which saw rents climb by 1.72% quarter-on-quarter and 6.89% year-on-year. Grades C and B had growth of 4.34% and 3.8%, respectively.

Among areas outside of the central business district, Sukhumvit-Asok was a prime location, with rents nearing those of CBD offices.

"In previous times of political disturbance such as 2010, very few office tenants left the market or downsized their operations," said Marcus Burtenshaw, executive director and head of commercial agencies.

"The Bangkok office market was able to weather that relatively short-lived political storm. Rather than leaving during times of uncertainty, office tenants tend to revisit their expansion and investment plans, often taking a wait-and-see approach, which tapers demand.
Falling vacancy rates and limited new supply should continue to support further rental growth in 2014, even in the wake of softer demand due to the political uncertainty, so long as the country is able to extricate itself from this political maelstrom in the near term."