Bangkok Post – Office oversupply hits Bangkok occupancy rates

The Ploenchit-Chidlom-Wireless corridor, Bangkok’s second-largest sub-market, has seen occupancy rates decline from a peak of 95% in 2019 to 76% today, primarily due to a surge in office supply, according to property consultant Knight Frank Thailand.

The consultant reported that this area in Bangkok’s central business district (CBD) comprises 38 office buildings with a total net lettable area of 940,000 square metres.

Despite maintaining the highest average asking rent in Bangkok at 1,090 baht per sq m per month, the area is grappling with an oversupply.

Over the past five years, office supply increased 30% in the area, adding 220,000 sq m, outpacing the CBD’s 24% uptick during the period.

Despite the substantial influx of new office space, demand has remained relatively stable, with total occupied space rising 5% for the period, outperforming the CBD average of just 1%.

However, this modest growth underscores a supply-demand imbalance, as the increase in occupied space has not kept pace with the rapid addition of new supply.

“While the overall occupancy rate has dropped, certain premium office buildings in the area have maintained high demand,” said Nattha Kahapana, Knight Frank Thailand’s managing director.

Properties such as Gaysorn Tower, Park Ventures and Siam Piwat Tower, which command rents higher than 1,300 baht per sq m per month, still report occupancy rates exceeding 90%.

The newly launched One City Centre and Siam Patumwan House, completed in 2023, have also contributed to the market’s shifting dynamics.

Despite slightly below-average occupancy rates of 75% and 70%, respectively, these buildings have collectively leased approximately 52,000 sq m of office space, representing 74% of the total take-up in the area during this period.

Looking ahead, the limited availability of land for new developments is expected to reduce supply growth in the Ploenchit-Chidlom-Wireless corridor over the next five years.

Only one confirmed project, CPN Siam Square, is slated to add 25,000 sq m of office space by 2027.

“This constrained pipeline is expected to support a recovery in occupancy rates, with projections suggesting a rebound to 87% by 2029, compared to an estimated 74% for the broader CBD,” said Mr Nattha.

The area’s strong appeal among multinational corporations and premium positioning are likely to sustain demand. The corridor’s long-term prospects also extend to investment opportunities.

With its prime location, robust tenant mix, and limited upcoming supply, the Ploenchit-Chidlom-Wireless corridor is poised for a gradual recovery.

However, challenges posed by oversupply in the broader Bangkok office market remain a key concern for developers and investors alike.