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News Release

Bangkok

Companies are expanding but providing less office space for employees


​​Many large corporates in Bangkok are planning aggressive expansion plans. However, owing to increasing efficiencies, companies are becoming leaner, requiring less office space per employee. This is reflected in net take-up of office space in Bangkok that is trending downward despite aggressive expansions of corporate occupiers, according to international property services firm JLL.

 

Data from JLL suggest that the Bangkok office market continued to enjoy a solid performance in 2016 with leasing activity remaining buoyant throughout the year. However, net take-up of office space across the city totaled 139,000 sqm last year, representing a 30% decline compared to the average five-year take-up rate of 200,000 square metres per annum recorded between 2012 and 2016.

 

"In the past, the average allocation of office space per person was 10 square metres. Nowadays it has shrunk to 5-7 square metres and is trending downward," says Ms. Yupa Sathienpabayut, Head of Office Leasing at JLL.

 

Asides from a continued rise in rents, tight office supply is one of the key factors driving companies to put a greater focus on efficiency to reduce space requirements.

 

Due to limited new supply and continued demand, the Bangkok office market is experiencing an undersupply situation with the average vacancy declining to 8.6% across the market and 6.6% in the prime segment, while office rents grew for the sixth consecutive year in 2016 and are likely to rise further in a foreseeable future.

 

"Tenants are facing a difficult period, not only because of higher rents but also the difficulties in securing large office space, particularly in prime buildings most of which are fully occupied. This has driven them to focus more on workplace strategies that enable them to decrease the amount of office space per employee," says Ms. Yupa.

 

"We are seeing this trend in all of the new startups and a growing number of large corporates that are implementing more efficient space solutions to facilitate business expansion where there are no alternatives available," she adds.

 

A good workplace strategy can help companies maximize space efficiency to accommodate more staff. There are many methods to achieve a more efficient workspace environment such as reducing enclosed private offices, centralizing meeting rooms and areas, utilizing of outside storage, and introducing hot desks.

 

With innovative design and office solutions, providing smaller space and/or hot-desking receives less resistance from desk workers than the past. In fact, smart workplace strategies allow for not only increased efficient use of space but also improved work environment.

 

While a successful workplace strategy helps companies reduce their occupancy costs and space requirements, many companies are now look to their workplace to increase employee productivity, staff satisfaction and retention, thereby creating a culture ready to adapt to future business evolutions.

 

"With limited new office supply planned for completion over the next four years and demand expected to grow in line with the positive economic growth forecast for Thailand, the Bangkok office market is likely to remain undersupplied and rents are likely to rise further. This will reinforce further the trend of occupiers focusing more on efficiency. We predict that occupiers are going to be 20 per cent more efficient in their workplace in the next 10 years," Ms. Yupa concludes.

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