An office building in HCM City. (File Photo)HCMCity (VNS/VNA) — Though the COVID-19 pandemic has cast a shadow overthe global economy, the HCM City office space market has not been badlyaffected this year, according to property consultancy companies.
A report from theCBRE said during the first quarter, the city office market added onenew grade B building, Friendship Tower on Le Duan Street, District 1,with a total net leasing area (NLA) of 13,700 sq.m. Ittook the total supply in the office market to 1.37 million sq. m.
Though the market has yet tosee a significant impact, CBRE said many tenants have asked landlords to cutrentals by 15-20 percent to compensate their revenue loss. Landlordshave agreed to delay rent payment but, if the pandemic situation worsens, couldagree to cut rents.
If the outbreak is containedbefore June the rental growth outlook could still be positive, CBRE said.
But if the disease is containedonly by September the outlook would be more bearish, with rents likely todecrease by 8-10 percent as companies demand cuts.
“CBRE also recorded somedelayed and cancelled transactions [scheduled for] the end of the third quarteras international tenants face difficulties in visiting potential sites,” CBREsaid.
“Such travel restrictions willpossibly lead to a decrease in absorption of new supply, especially with theHCM City office market expected to welcome more than 70,000 sq.m ofNLA by the end of 2020.
“Hence, the market vacancy ratewill increase regardless of how soon the disease is contained. Should thedisease be contained before June the vacancy rate will only increase from7 percent to 14 percent. However, if the disease lasts untilSeptember the vacancy rate might increase to 14-16 percent.”
Jones Lang LaSalle (JLL) said theimpact of COVID-19 on grade A and B demand is still limited.
Around 68,700 sq.m of new officespace was completed in the first quarter, mainly in grades B and C, bringingthe office stock to more than 1 million square metres in each category.
Most of the successful deals inthe first quarter were negotiated before the epidemic and so the impact ofCOVID-19 on demand in grades A and B is still limited.
Companies have said that theoutbreak is an outstanding opportunity to switch to flexible workspace anddecentralised office buildings. During times of such economic and businessdisruptions, most bear significant rental costs while not generating muchrevenues, while large tenants realise that business discontinuity could occurif they have only one office during lockdowns.
“After the COVID-19 pandemic,the office market will be shaped by new trends in which tenants willprioritise agile working options,” Duong Thuy Dung, senior director ofCBRE Vietnam, said.
“Tenants will prioritise agileworking options like leasing flexible workspace or distributing workforce tovarious offices across the city.
“Tenants will start to pay moreattention to their employees’ wellness instead of focusing too much on savingrental costs like before. LEED-certified buildings that comprise wellnessfeatures such as environment-friendly spaces, quality ventilation systems andnatural lighting will be tenants’ new preferences in future.”
JLL predicted that since mostnew buildings that would enter the market in 2020 are already in thefitting-out stage or nearly completed, there would be no adjustment to its lastforecast before the pandemic.
“As the global economy remainsuncertain, especially now with the impact of COVID-19, tenants’ new set-up andexpansion plans could possibly be affected in the near-term.
“The landlords of large vacantbuildings, many of which are newly completed, may need to consider their rentsand leasing strategies to attract tenants,” it said./.
VNA
