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News Release

Bangkok

​Bangna-Trad office market suffering shortage of quality supply

Rising rents expected to encourage a new wave of development


​With office rents in Bangkok’s central business areas rising by 15% in 2013 and nearly 6% so far in 2014, more firms are considering the Bangna-Trad area as an alternative business location, thanks to its competitive rents and convenient access to both Bangkok’s central business areas and the Eastern Seaboard. However, the office market along Bangna-Trad Road is suffering a severe shortage of quality office supply. This has created new opportunities for property developers that are looking to develop commercial projects in new locations outside the central business areas where land has becoming increasingly scarce and expensive, according to JLL, a professional services firm specializing in real estate.

Mrs. Suphin Mechuchep, Managing Director of JLL, said “The Bangna-Trad area has been predominantly known as a major manufacturing and logistics hub east of Bangkok.  Over the past few decades, the area has emerged as a major commercial location, with a number of retail and office developments rising along the main road.”

“While the number of major retail centres has continued to increase along Bangna-Trad Road to serve the fast growing residential market in the area and customers from downtown Bangkok, the area has seen no growth in new office supply since 1994. As a result, the office market there has been dominated by home offices and aging office buildings, many of which are poorly managed and outdated in terms of specifications and facilities,” said Mrs. Suphin. 

According to JLL’s Thailand Property Intelligence Centre, the office market on Bangna-Trad Road concentrates in the area between the Bangna- Sukhumvit intersection and Bangna-Trad Road k.m 10 and has a stock of 296,000 sq.m, only approximately 30% of which is space of acceptable quality. 

Despite the lack of quality supply, demand for high-rise office space in the area has been increasing rapidly as indicated by a declining vacancy rate, currently at 17.4%, which has fallen twice as fast as the market average since 2010. Importantly, a number of buildings of better quality are now experiencing single digit vacancy rates. 

Ms. Yupa Sathienpabayut, Director of Office Leasing at JLL, said “Traditionally, demand for office space in the Bangna-Trad area came largely from companies that needed easy access to Bangkok’s central business areas and the Eastern Seaboard as well as to Suvarnabhumi International Airport. Today the area is attracting companies from a wider variety of industries looking to take advantage of relatively low rents and improved infrastructure, with many of these companies choosing to locate their back office functions in the area. This trend is continuing as rapidly rising office rents and limited available supply in Bangkok’s central business areas are forcing more companies to consider secondary locations.”

“Having said that, the office market on Bangna-Trad Road is not well equipped to meet this new demand. Most of the buildings of acceptable quality are either nearly or fully occupied,” said Ms. Yupa. “There has been no new office development in this area over the past 20 years as achievable office rents along Bangna-Trad Road have until recently been too low to offer an attractive return for developers,” she explained. 

However since 2010, office rents along Bangna-Trad Road have increased more rapidly than the market-wide average during the same period due to continued demand and tight supply of quality space. Average rents along Bangna-Trad have risen from THB 287/sq.m/month in 2010 to THB 389/sq.m/month at present, a 35.4% increase. When compared to the 23% market-wide increase seen during the same period, it is clear that the area is heating up. 



“We have seen a few buildings now asking for THB 600-650/sq.m/month. These rental levels will be attractive enough to encourage new Grade A office developments in the area. There is already one office development project that is under construction on Bangna-Trad Road, Bhiraj Tower at BITEC. Upon completion in 2016, the 29-storey development will provide 31,880 sq.m of lettable space and will be the first prime grade office building on Bangna-Trad Road. We believe more will be coming,” Ms. Yupa concluded. ​