Rare Supply of Grade A Offices Emerges in Thủ Thiêm Urban Area
Rare Supply of Grade A Offices Emerges in Thủ Thiêm Urban Area
In the context of the continuing scarcity of new Grade A office supply in the central area of Ho Chi Minh City (HCMC), a recent notable development is the activation of The METT office project in Thủ Thiêm urban area. This project comprises 23 floors and 3 basement levels, with a total leasable area of 28,000 square meters.
Ms. Lại Thị Như Quỳnh, Senior Manager of Office Leasing Services at Savills HCMC, noted that this is a rare Grade A office building in Thủ Thiêm specifically and in HCMC in general.
Ms. Quỳnh also stated that, despite the increasing demand from businesses for high-quality, green, and sustainable work environments, the current commercial real estate supply still falls short of meeting the "net-zero" or ESG standards in the HCMC market. Therefore, the emergence of new office supply like The METT is considered a promising solution to meet the large and diverse future demand in the area.
Especially, following the development direction of HCMC's new Thủ Thiêm urban area, this area is being invested in to attract multi-industry development, including business, finance, information technology, R&D, healthcare, and education. Therefore, the introduction of Grade A office supply at this time is seen as a fitting solution for the large and diverse future demand in the region.
Grade A office supply with an area of 28,000 square meters in Thủ Thiêm became operational in Q2/2023.
In Savills Vietnam's Q1/2023 real estate market report for HCMC, Grade A office supply accounted for 12% of the market share with 295,200 square meters, a 6% increase per quarter, while Grade B accounted for 42% with 1.09 million square meters. The METT is a rare Grade A supply that became operational in Q2/2023.
In Savills World Research's recent Savills Prime Office Cost report on office costs for 2023, the global office market is strongly influenced by requirements related to environmental, social, and governance (ESG) criteria. Specifically, ESG-standard regulations and the increasing cost of energy have led corporations and businesses leasing offices to focus on energy efficiency and the impacts of climate change.
Therefore, Savills experts predict that in 2023, corporate tenants are facing a challenging task of upgrading to high-quality workspaces that meet ESG standards and promote sustainable development.
However, this issue cannot be simply solved by developing premium office projects to meet the growing demand of businesses. The limited land fund in the central areas of major cities, coupled with inflation and high-interest rates, has caused construction costs to soar. Investors are facing more difficulties in developing new projects, leading to a significant shortage of Grade A offices.
In particular, in HCMC, one of the most dynamic economies in the Asia-Pacific region, Grade A office supply has remained relatively scarce for many years.
