Bangkok remains one of the world’s most affordable premium office locations
Premium office rents in Hong Kong’s Central have stayed most expensive globally, despite a decline of more than 20% over the past year
Bangkok is the 15th most affordable premium office location in the world, according to JLL’s latest Premium Office Rent Tracker that includes 100 office markets and submarkets in 86 cities. The city also ranks as the 5th and 2nd most competitive premium office market in Asia Pacific and Southeast Asia respectively.
The Premium Office Rent Tracker is JLL’s benchmark view on the best achievable office rent in the best buildings in the world’s top office markets. The research provides a reference tool for corporate occupiers seeking to compare occupancy costs across markets and find the best value in the world’s most expensive cities as well as global investors looking to identify sources of real estate demand for premium space.
According to the report, Hong Kong-Central has remained the world’s most expensive premium office location at USD240 per square foot per annum, despite a decline in rents of more than 20% over the past year while Nairobi offers the least expensive annual premium office rents in the world at USD17 per square foot per year.
On average, rents for premium buildings worldwide have fallen less than the broader Grade A office market, demonstrating the resilience of quality workspace. However in Bangkok, the impact of COVID19 has had a similar impact on both premium assets and the wider grade A market, with values falling by -4.5% and -4.4% year-on-year, respectively as of the fourth quarter of 2020.
Michael Glancy, Head of Transaction Businesses at JLL, says that Bangkok office rents have dropped for the first time since 2011, largely due to softening demand from business sectors that have been hit hard by the pandemic and increasing vacancy as businesses ‘right size’.
“Bangkok has over 2.4 million sqm of new supply over the next six years, which will create competition between landlords to attract and retain occupiers, keeping rents at an affordable level for the foreseeable future. This new supply will help to transform the quality of real estate across the city over the long term, helping to attract local and international businesses to base themselves in Bangkok,” he adds.
As office workplace requirements adjust to the new normal, premium offices offer collaboration space, serving as social hubs and centers of innovation, says JLL’s report. The banking and finance sectors, traditional occupants of premium space, continue to be the driving force of rental demand, followed closely by tech firms, which are particularly active in innovation-rich cities.
“The pandemic has proved to be an accelerant of trends in commercial real estate,” said Jeremy Kelly, Director, Global Research, JLL. “As markets adapt and recover, we anticipate both investors and occupiers will continue to seek out premium real estate for its ability to adapt to a new purpose of work.”
For more information, download the report: Premium Office Rent Tracker.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $18.0 billion in 2019, operations in over 80 countries and a global workforce of over 92,000 as of September 30, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.