Chris Currie, associate director of office services for CBRE, said on Tuesday that rent was part of a negotiation process between landlords and tenants and that the market was witnessing a trend that landlords have to offer incentives and flexible terms to lure tenants to their facilities, especially new players.
Rent-free periods, a longer fit-out period, free parking, payment terms and security deposits are what landlords are offering when dealing with their potential tenants, according to the associate director.
Some landlords, instead of cutting rent, offset a significant amount of fit-out cost for tenants by offering some months upfront rent free. Besides, the form of stepped rent, which means rent will increase yearly starting from a lower rent to the negotiated one, is another way that new landlords use to woo tenants in a market with abundant supply.
Currie said the market for office space during the first half of this year has slowed compared with the same period last year. Demand in the market comes from education, insurance, bank and industrial offshoot sectors.
The HCMC office market recorded that the absorption decreased significantly to 67,700 square meters from January-June while the market saw 130,300 square meters taken up in the same period last year.
According to CBRE, the office stock in HCMC is around 1.75 million square meters, with nine grade A buildings offering 300,000 square meters, 42 grade B facilities providing 697,500 square meters and 219 grade C supplying 745,800 square meters.
The market recorded the average office rent at US$40 per square meter for grade A, US$30 for grade B and US$20 for grade C facilities.
Vacancy rate across the market is around 17.6%. However, some existing grade A buildings such as Sun Wah Tower, Metropolitan, Diamond Plaza, Saigon Center and Kumho Asiana are enjoying an occupancy of over 95%. Meanwhile, some new players such as Bitexco Financial Tower and Vincom Center have filled 30% and 35% respectively since those facilities have been put into service.
Currie cited the company’s researched figures, saying that there will be 298,500 square meters of grade A and B office spaces to enter the market next year as some projects such as Times Square and M&C Tower in downtown are scheduled for completion by the first quarter of next year.