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News Release


Prime quality alone does not guarantee leasing success of an office building


By Yupa Sathienpabayut


Out of 850,000 square metres of new office supply that is planned for Bangkok over the next five years, over 80% is in 'prime' development projects. Better quality = higher rents is a primary reason driving the growth of new office supply. While prime quality counts for a lot, evidence shows there are a number of other factors that enable certain 'prime' office buildings to achieve higher rents than many others.


JLL defines prime office buildings as buildings that meet various rigorous criteria for excellent location, design, fittings, facilities, management and amenities.


According to the firm's Thailand Property Intelligence Centre, the existing stock of office supply in Bangkok is currently standing at over 8.5 million square meters. Of this, 3 million square metres are in Grade A projects, accounting for 35% of the total stock, a similar percentage that has been witnessed over the past decade. 


However, this is changing as most of the new office supply that is coming on stream is in Grade A development projects. By the end of 2021, Grade A space will account for 40% of the total office stock, based on new office development projects that are now under construction or have been proposed in Bangkok.


Grade A office buildings across the city are generally performing well, with record low vacancies averaging only 6.6%, compared to 9.7% in the non-prime segment. They also command 28% higher rents than non-prime buildings.


Among prime developments, rents vary from building to building, however. So do abilities to attract tenants.


Riding the rails to lower vacancy and higher rents


A close proximity to BTS or MRT stations have been a clear factor determining competitiveness of an office buildings. JLL's study reveals that office buildings with an easy access to a BTS/MRT station enjoy an exceptionally strong demand, with vacancies averaging 4.7%, whereas building located further away are seeing higher average vacancy rates at above 12.5%.


Access to transit also has a significant impact on rents. While Bangkok's market-wide office rents rose by 15.8% in 2016, rents in office buildings located within 0-250 metres from a BTS/MRT station grew by 20.6% over the same period.


It is interesting to note that approximately 60% of future office supply planned for completion between 2017 and 2023 are in development projects located no farther than 250 metres from a BTS/MRT station.


Age counts


The three-year net absorption of prime office space in Bangkok between 2014 and 2016 was 362,000 square meters. Of this, 80% was in buildings whose construction was complete in 2014 or after.


The findings were no surprise as most of the newer buildings offer more modern office features and specifications as well as prestige.


Realising stronger demand for more modern buildings, some landlords with older buildings have undertaken a renovation of their buildings in efforts to enhance their competitiveness. After renovation, some prime buildings in well located areas could fetch significant rental growth rates ranging between 15% and 20%.


Some of the notable renovations for prime office buildings completed in 2016 were the overhaul of Sindhorn Tower on Witthayu Road with significant changes in both exteriors and interiors as well as facilities improvement, and a major facelift for Siam Tower on Rama I Road.


Green advantage


As more international and Thai corporates align themselves with the global sustainability agenda, green features of an office building is now on a checklist for many office occupiers. For this reason, being green has become an increasingly important differentiator that is believed to contribute a lot to strong competitiveness of office buildings in Bangkok.


The green building certification programme that are most recognized globally and in Thailand is LEED (Leadership in Energy and Environmental Design) by the United States Green Building Council.


Putting owner-occupied buildings aside, at the time of writing this article there are only a handful of existing prime office buildings in Bangkok that are LEED certified, including Park Ventures Eco Complex, Sathorn Square, FYI Center, AIA Capital Tower and AIA Sathorn Tower. Most of these LEED buildings outperform many other prime office buildings.


Realising the green advantage, owners/developers of many existing office buildings and development projects in Bangkok have submitted their application for LEED certification. Based on publicly announced intentions by investors, more than half of the city's known future supply is expected to be green.


Better management, strong performance


Evidence shows there is a correlation between performance of office assets and the way they are managed. Leading office buildings like Park Ventures Eco Complex, Sathorn Square, Bangkok City Tower, and Q. House Lumpini are prime examples. These four buildings have a combined occupancy rate of 97%, compared to the Grade A average of 91% in central Bangkok.


Just as important, achieved rents at these buildings are significantly higher than other Grade A buildings nearby, with achieved en bloc figures fetching a 10%-30% premium over nearby competitors.


Having said all that, performance of an office asset relies on a combination of different factors that complement one and another. The fact that certain brand-new prime office buildings with high specifications achieve lower rents and occupancies than older prime office buildings located in the same area explains the case.


Ms Yupa Sathienpabayut is Director of Office Leasing at JLL. For advice on office leasing, readers can contact her by email: or visit