Starting next year, new offices will arrive in the area north of the central business district (CBD), said Surachet Kongcheep, senior manager of the research department. The construction boom is being fuelled both by local firms seeking to expand and by growing demand for a regional base ahead of the Asean Economic Community (AEC) in 2015.
From January 2012 on, more than 1,900 new companies were registered each month at the Business Development Department. Office occupancy is high throughout the city, with buildings near BTS and MRT stations able to charge premium rent. The increase in the minimum wage is adding to the cost of building management. While some landlords have offset this by cutting staff especially by investing in cameras to replace guards the wage rise will eventually become one of the pressures driving up rents throughout the city.
Bangkok has more than 8 million square metres of office space. But demand is starting to outstrip supply,with little new land available in the CBD and rents heading skyward. More than 26,640 sq m has been or is scheduled to be completed in 2012 about 24,200 sq m in the outer CBD area and the rest in the northern fringe.
The CBD represents the biggest share of Bangkok's office building market with 36% of total supply, followed by the northern fringe and the outer CBD with 20% and 13%. More than 286,000 sq m of office space is scheduled to open in 2014 in the three zones. The northern fringe represents the largest share with 71%, or 3.6% of the current supply in Bangkok. The limited availability of land in the CBD and outer CBD areas and rising land prices over the past few years were obstacles for all types of real estate development, including office buildings.
Most new office buildings were located in the northern fringe and had similar facilities to those in the CBD. The outer city west area had the highest occupancy rate for the third quarter of 2012, though the outer city west, outer CBD and northern fringe had similar rates. Average occupancy rate in the CBD was the second highest, and the number of companies extending leases increased from 2011, due to limited current and future supply. The occupancy rate in the CBD increased slightly from the previous quarter, with new companies leasing office space and existing tenants expanding their offices.
An overall rise in occupancy rate coincided with positive signs in Thailand's economy and politics. The city is well positioned for companies looking to enter Myanmar, Laos and Cambodia. Although some office buildings were added to the market in 2011 and 2012,most office space was occupied or reserved before the completion of the building, so the market was unaffected.
In addition, all office buildings completed in 2012 were small.
With modest growth expected for the next two years and a limit on new supply,Mr Surachet predicts a gradual but sustained rise in occupancy rates during the 2012-13 period.