Potentiality for unprecedented uprise in office sector

Tu Thi Hong An, Associate Director, Commercial Leasing Savills Vietnam said: “The design, resources and functionality of offices will completely change in the coming years. If you consider all the numerous demand drivers and the requirements of today’s modern office occupiers, the opportunities are infinite.”

In the third quarter of this year, Hanoi’s office market was recorded with no new supplies. However, the supply is expected to increase significantly by the end of 2018, in the fourth quarter of 2018, there will be six new projects supplying 109,000 square metres. In 2019, 145,000 square metres from 17 new projects will enter.

In the meanwhile, in Ho Chi Minh City, one new Grade B and one new Grade C office provided approximately 9,000 square metres in the last third quarter. Total office space reached over 1.8 million square metres; however, approximately 387,000 m2will be added by 2020. 

However, Vietnam’s companies and corporations have been altering their office model to co-working space for long-term leasing. What is so remarkable about co-working space is its high sense of community, convenience, and flexibility, the initial investment cost could be minimized, a serviced office fully equipped with furniture and facilities including common working space, pantry, Wifi, and printing area.

Neil MacGregor, Managing Director of Savills Vietnam said: "It is crucial for office occupiers to carefully analyse their office needs, plan ahead and manage future occupancy costs effectively.”

"“After Grade A rental growth of over 7% in 2017, momentum has continued in 2018 and is set to remain at record levels well into 2019 and beyond," he added.

Sharing opinion at Savills’s recent event, Yann Deschamps, Head of Workthere stated that the upsurge of co-working spaces has set a new milestone in the office market.

“Co-working is not just about the sharing of infrastructure and costs; it is about belonging to a community. Spaces are designed to provide a productive and collaborative environment for dynamic inhabitants and created without corporate constraints on what is perceived to be an “office” environment,” said he.

Deschamps added that the co-working realm is evolving faster in Asia than in other regions in the world and flexible workspaces will account for 15 per cent of total office supply in Southeast Asia by 2030.

In Vietnam, the number of co-working spaces in Vietnam rose by 62 per cent in 2017, driven by growth in start-ups and the need for cost-effective spaces, whilst the entry of international operators like Atlas will usher in a period of partnership agreements and M&A.

The first half of 2018 saw the Vietnamese office sector witnessing record occupancy levels with strong tenant demand, limited new supply and rapidly growing office rents.