In the past 2-3 years, the office rental market has become particularly interesting due to a lack of new supply, especially in the city center, where most of the existing office spaces date back to the 1980s and 1990s. This has led to a surge in the development of mixed-use office spaces by major investors. TerraBKK will take you on a journey to explore when the office rental market in Bangkok stagnated and how much new supply we can expect in the future.

A Look Back at the Office Rental Timeline

            The development of office rentals began in the early years from 1982 to 1986, with a concentration in the Ploenchit-Chidlom and Silom-Sathorn areas, totaling approximately 370,000 square meters. From 1987 to 1991, office rental development continued at an average of three projects per year, resulting in a total office rental space of about 622,000 square meters by 1991.

            The office rental market in Bangkok peaked between 1992 and 1997, following a political recovery, with an average of 7-8 new office projects per year. The areas with the highest growth rates remained Ploenchit-Chidlom and Silom-Sathorn, but interestingly, office rentals also expanded into other areas like Asoke, Ratchada-Rama 9, and early-mid Sukhumvit. In just five years, 1.35 million square meters of new office supply emerged in Bangkok, more than doubling from the previous years. Most of the new office buildings were 18-38 stories high, marking a golden era for the office rental market.

After the 1997 economic crisis, the growth of the office rental market began to slow down. From 1998 to 2005, about 3-4 new office projects emerged each year, with sizes ranging from 10,000 to 300,000 square meters, leading to a total of 968,000 square meters of new office rental space by the end of 2005.

            As the economy started to recover and public transportation systems expanded, new locations like Ratchada-Rama 9 and mid-late Sukhumvit emerged, showing higher growth rates than older areas like Silom-Sathorn. Meanwhile, Ploenchit-Chidlom continued to see new office developments, particularly in Grade B-A office buildings, which increased significantly this year.

            In 2017, Bangkok had approximately 400 office rental locations, totaling around 8.5 million square meters, concentrated in areas like Silom, Sathorn, Chidlom, Ploenchit, Asoke, Sukhumvit, Rama 9, Ratchada, and Phaya Thai, with an average rental price of 623 baht/sq.m.

Future New Office Developments

            As mentioned, the trend of office rental development has been revitalizing since the past 2-3 years after a slowdown. From 2018 to 2025, there will be 1.16 million square meters of new office supply, mostly in mixed-use projects, totaling about 1.11 million square meters. This suggests that mixed-use developments may become a substitute product in the office rental market. The majority of this new supply will be in the Rama 4 area, including projects like One Bangkok, Dusit Thani+CPN, and The Parq, which together will provide 584,000 square meters of office rental space, revitalizing the CBD.

            Interestingly, new office rentals are also emerging in other areas such as Ari, Ladprao, and late Sukhumvit, leading to a more distributed job market across different regions.

Future Mixed-Use Projects

            Mixed-use projects are currently the hottest trend in real estate development. From 2017 to 2025, 20 mixed-use projects will emerge, both small and large, with a total project value exceeding 618.1 billion baht. TerraBKK sees significant growth in mixed-use projects in attractive locations, particularly in Bangna, where investments in mixed-use projects total over 317 billion baht, surpassing the total value of projects in the CBD, which is around 216.2 billion baht. Additionally, the opening of the Green Line BTS from Bearing to Samut Prakan makes Bangna an interesting area that could become a secondary city for Bangkok in the future - เทอร์ร่า บีเคเค

Article by: TerraBKK Investment Tips

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