Cushman & Wakefield: Office rent in city remains high
Article
(Listed Jul 2, 2009)
The average office rent in HCMC, especially at prime locations, is still higher than the reasonable level even though it has fallen sharply in the year to date, according to the general manager of the real estate services firm Cushman & Wakefield (Vietnam) Ltd.
The office rent is expensive in certain areas in the city, Toby Dodd told a real estate business luncheon organized by the European Chamber of Commerce in Vietnam (EuroCham) in HCMC yesterday.
Dodd gave the comment when showing a slide of his presentation that unveils the office rent in HCMC in the first half of the year was still much higher than in regional cities like Bangkok, Kuala Lumpur, Jakarta and Manila.
"HCMC is expensive as the rent of space at dominant buildings is still too high," Dodd told the Daily after the luncheon on the topic of "Survival of the Quickest - Living in a Tenants World."
Many buildings in this city offer much higher monthly rents than the "fair reasonable rent" of US$30 per square meter, Dodd furthered. "I think half of the market has reached this level now but half the market is still too high."
Last month, the real estate services firm CB Richard Ellis Vietnam (CBRE) released its updates that the monthly rent of offices in HCMC had tumbled by 30-50% in the first half of the year but stood at US$60 per square meter, or US$10 lower than the highest level recorded in the first quarter and over US$25 lower than 12 months ago.
Dodd forecast that the average monthly rent for Grade B offices in HCMC would fall to US$20-25 per square meter.
According to CBRE, HCMC has 1,024,000 square meters of office space as of June as against 910,000 square meters last year. The company put the vacancy rate in central business districts at 15% and would double when more projects go online later this year.
Dodd said with US$30 per square meter for the Grade A office space, landlords would still have profit. "From the landlords I have spoken to thatis the level they are still profitable." However, Dodd said he did not want to see the rent of Grade A office space to go down lower than the reasonable rate because it would be a bad thing for the market.
Dodd noted the reasonable rent for Grade A offices were based on the ability of tenants to pay, comparison with regional markets, and the supply and demand in HCMC in the current situation. He said supply had outstripped demand in this market.
Both landlords and tenants should look for win-win solutions and long-term relationships for their mutual benefits in the current time, Dodd said in response to the Daily question whether now was the time for tenants to have a high voice about the deal.
Dodd said the office rent growing too high like previously was not the right definition for a growing office market, especially when companies are trying to cut costs. "A growing market means more buildings and more tenants."
At the luncheon, OUT-2 International Design Consultancy Co. managing director Andrew Currie also suggested ways for companies to maximize business efficiency and effectiveness in tough times.
The average office rent in HCMC, especially at prime locations, is still higher than the reasonable level even though it has fallen sharply in the year to date, according to the general manager of the real estate services firm Cushman & Wakefield (Vietnam) Ltd.
