Global Economic Recession and Financial Slowdown Are Disturbing Occupiers
Demand for office space in Bangkok in the third quarter of 2008 persistent to get better. Though, since the global economic recession exploded in October, demand has languished with large companies beforehand in view of occupying more office space now holding back or reducing their growth plans.
Head of Markets at Jones Lang LaSalle, said “Impact of the global financial slump has turn out to be more obvious. While a few economists estimated Thailand to feel the shock in early 2009, the chaos in the Thai stock market in the last few weeks shows that the Thai financial system has already been influenced.”
“The outcome of the global economic recession has also spilled over into the Bangkok office market. Occupiers that were aggressively seeking office expansion prospects in the first three quarters of 2008 are now rationalizing their development and occupancy plans. This imitates the less positive approach towards the short to medium term economic and business point of view on top of the current political uncertainty that has held back the country’s economic projections for over two years now,” she added.
At the same time as fresh demand from business expansion has constricted, demand for office space from fresh business association has dried up. In the third quarter of 2009, Jones Lang LaSalle was concerned in office leasing transactions adding more than 10,000 sq m of space across Bangkok, the majority of which were lease renewals and relocations.
“Despite the fact that demand is deliberate, excellent news is we have not seen any global corporations shut down operations in Thailand. Although most of these companies are seeking ways to reduce occupancy costs by means of renegotiation of lease terms with landlords, transfer to a more reasonable building or downsizing,” said Ms. Yupa.
However leasing activity in the last quarter of 2008 is slowing, full-year demand is likely to get better compared to 2007 due mainly to raised leasing activity in the initial three quarters. Though, vacancies are expected to go up more because of fresh supply coming on stream and the hold back in demand. Besides, rearrangement of more government agencies to the recently constructed Government Office Center will carry on contributing to the increase in vacancy rates in the coming months.
Head of Markets at Jones Lang LaSalle, said “Impact of the global financial slump has turn out to be more obvious. While a few economists estimated Thailand to feel the shock in early 2009, the chaos in the Thai stock market in the last few weeks shows that the Thai financial system has already been influenced.”
“The outcome of the global economic recession has also spilled over into the Bangkok office market. Occupiers that were aggressively seeking office expansion prospects in the first three quarters of 2008 are now rationalizing their development and occupancy plans. This imitates the less positive approach towards the short to medium term economic and business point of view on top of the current political uncertainty that has held back the country’s economic projections for over two years now,” she added.
At the same time as fresh demand from business expansion has constricted, demand for office space from fresh business association has dried up. In the third quarter of 2009, Jones Lang LaSalle was concerned in office leasing transactions adding more than 10,000 sq m of space across Bangkok, the majority of which were lease renewals and relocations.
“Despite the fact that demand is deliberate, excellent news is we have not seen any global corporations shut down operations in Thailand. Although most of these companies are seeking ways to reduce occupancy costs by means of renegotiation of lease terms with landlords, transfer to a more reasonable building or downsizing,” said Ms. Yupa.
However leasing activity in the last quarter of 2008 is slowing, full-year demand is likely to get better compared to 2007 due mainly to raised leasing activity in the initial three quarters. Though, vacancies are expected to go up more because of fresh supply coming on stream and the hold back in demand. Besides, rearrangement of more government agencies to the recently constructed Government Office Center will carry on contributing to the increase in vacancy rates in the coming months.
Labels: Bangkok office space, Global economic recession, occupancy costs
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