The Bangkok office market is dependent on a central location, access to public transport and highways. The market can be classified in different locations:
Bangkok CBD (Central Business District)
The Central Business District comprises areas such as Sathorn, Silom, Rama IV, Wireless Road, Ploenchit, Asoke, and the early Sukhumvit area up to Soi 24. CBD is the historical business area and offers the highest concentration of offices in Bangkok. These areas are easily accessible by mass transportation.
Bangkok New CBD
The Bangkok ‘new CBD’ area comprises Rama IX and the Ratchada areas. These two areas have been developed along the MRT line. It is easy to commute to this area using public transportation. Many big companies have chosen to set up in this area. Some grade A offices have been built along Ratchadaphisek road. Real estate prices are more affordable in this area too, with many residential condominiums targeting mid-urban class.
The non-CBD areas are in suburban and midtown Bangkok (Bangna, Chaengwattana, Thonburi etc…). These locations can be convenient for companies willing to establish outside of the city to avoid traffic. For example, these areas are closer to the airport or industrial areas located in the east or north of Bangkok. Prices are also more affordable in these areas.
Bangkok office market types
The Bangkok office market has two types of ownership structures:
Single ownership office buildings comprise office towers owned by a single company or individual. There are two kinds of offices in this market. The first type are older, smaller office buildings managed by an individual landlord. Usually these office spaces are more affordable, and the services offered are very basic. The second type of offices are high rise buildings or ‘mixed-use’ buildings managed by a professional owner. These offices represent the majority of supply in Bangkok. Banks, insurance companies, or large corporations often back these large projects. In 2018, single ownership office space represented over 75% of the total office space market, with almost 7 million square meters.
The total supply of single ownership buildings increases every year. Future projects in CBD where developers have recently acquired lands should continue to increase in rent prices in the coming years. Large mixed-use projects are the trend for the coming years in Bangkok. New office buildings that will be completed during the period 2019-23 will total over 800,000 square meters.
Single ownership building trend for 2019:
In 2019, there will be four new single ownership office projects complete with total office space of 190,000 Sqm. The four projects include CP Tower 4 on Vibhavadi-Rangsit Road with 49,000 Sqm, Spring tower in Ratchatewi area for 27,000 Sqm, Samyan Mitrtown a mixed-use project near MRT Sam Yan on Rama IV for 45,000 Sqm and The Parq near MRT Queen Sirikit Center with 71,000 Sqm.
Multiple Ownership: strata title offices
These office buildings are also called office condominiums or strata title offices. Each unit has an individual owner and the building is managed by a juristic office. Strata title offices represent approximately 2 million square meters in Bangkok, which represent 25% of the market. In CBD, it represents approximately half of the total supply.
The majority of strata title offices were built in the 90’s. In recent years, development of such offices has been nonexistent. Developers are more focused on residential real estate, targeting larger audiences with higher price per square meter. Cost of land is one of the main reasons of this trend. Currently some developers are considering new development of strata title offices in Bangkok and new projects may arise in the coming years due to an increasing demand from companies who wish to acquire their own office space.
Multiple ownership building trend for 2019:
In 2018, two new mixed-use projects offering new strata title office spaces have been launched for a total of 10,000 Sqm. The first one is located at 1 km from BTS Surasak at the fringe of Bangkok CBD and the other one is located in New CDB Huay Kwang area.
While office rent has increased in the last years, strata office prices remain stable. Therefore, these office spaces are becoming more and more attractive for companies looking to secure their own space and for investors looking for good yield.
With the saturation of the residential market, the Bangkok office market will become stronger in the coming years with both end users looking to secure their workspace by acquiring it and/or investors looking to diversify their property portfolio.
Facilities and office rating
In Bangkok, offices are often rated into 3 categories from grade A to grade C. The main factors taken into consideration are: layouts, air conditioning control, efficient lift system, design, car park, building management, and location.
Grade A offices are prime properties offering a high level of service and high construction standard.
Grade B offices are usually good value for money. While the building may be older, the location is usually good. Tenants in these offices may have to compromise on some factors.
Grade C offices are older offices with very competitive rents. Services offered are very basic and location may be far from mass transit or popular areas.
Your options to set up an office
The current Bangkok office market offers some options to adequately set-up your office:
Co-working space and share office
Co-working space and shared offices are more adapted for small and young companies. Benefits are flexibility, community, services, and building your network with other companies. Inconvenience of shared office space will be distraction, lack of confidentiality, and no customization possible. Hidden costs from some providers may be an issue as well.
Co-working spaces in Bangkok are booming over the city for the last 10 years. There is a lot of competition between the providers, so it is easy to find. Prices will mainly depend on the quality of service and location.
Registering a company in a shared office space is possible in Thailand as some actors propose domiciliation service too.
Office rental will offer more stability. On the other hand, fixed costs will increase over the time because of the rent increase. Compared to other cities, Bangkok has one the lowest rental office cost. But it is increasing and will continue to increase in the coming years.
In Thailand standard commercial lease terms are 3 years. It is usually renewable, but the owner has the option to not renew. Therefore, these kinds of leases are not secure. Longer leases are possible, but in regards to Thai law, they require registration of the lease, taxes to be paid and extra costs. Most of the landlords do not want to register the lease because of these extra taxes. They want to keep the option to evict their tenants as well.
Another option is to buy your own office space. Strata titles offices can be purchased by individual or by companies. Foreigners are also allowed to purchase offices with few conditions. Purchasing an office space in Bangkok offers some advantages, as we have described in an other article.
If you are looking to acquire a strata office or if you require more information about the Bangkok office market, do not hesitate to contact our property consultant.