Vietnam - Hanoi office vacancy rate hits record high

The market vacancy rate of office buildings in Hanoi last quarter increased to 28 percent, the city’s highest rate ever, according to a recent report by CB Richard Ellis Vietnam (CBRE).

According to CBRE’s quarterly report, the vacancy rate for office buildings belonging to the Grade A category in the fourth quarter of last year soared to 34 percent, up from the mere 5 percent recorded in the previous quarter.

Meanwhile, Grade-B offices experienced a vacancy rate of 24 percent, up from 18 percent in the third quarter.

The total vacancy rate for both grades is the unprecedentedly high 28 percent, thanks to several new entrants to the market such as VA, Detech, and Mipec Towers, the report said.

“Average asking rents trended down due to new entrants in both Grade A and B, although no change in asking rents recorded in existing projects,” it stated.

CBRE said investors are willing to provide heavy incentives, such as free signage, longer free rent periods, or discounts without changing headline rents, to attract tenants.

In the city’s downtown, for instance, tenants can have a 3-5 year free rent period with leasing terms of 3 to 12 months.

The consultancy firm also said that new supply in the fourth quarter of last year was 143,000 square meters, or 15 percent of the total supply of the year.

However, CBRE stated that the rapid increase in supply will “lead to increased vacancy as demand is yet to catch up in near term.”

Meanwhile in Ho Chi Minh City, CBRE said in another quarterly report on market development in the city that rents for Grade-A office slumped in the last quarter of 2011 due to the fact that the Bitexco Financial Tower and Vincom Center, both of which have been operational for a year, still have low occupied rates.

“Bitexco Financial Tower and Vincom Center put downwards pressure on Grade A rents,” the report said.

Meanwhile, running counter to the high vacancy rates of these newcomers, seven more mature buildings are still over 95 percent occupied.

“They also have been able to maintain rental rates at, or usually higher, than market average,” the report said.

TUOITRENEWS

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