Hanoi Office Market 3Q21
Fourth wave of Covid-19 put launch activities on hold
Several new projects planned to come on stream in 3Q21 had to postpone their opening until the end of 2021 or early next year, as construction activities were halted. In general, total Grade A & B supply stayed stable at nearly 2.2 million sqm NLA, located in CBD districts like Dong Da, Ba Dinh, Hoan Kiem and non-CBDs such as Cau Giay, Nam Tu Liem.
As of 3Q21, the total vacancy rate of Grade A & B remained at 12.2% and decreased by 3% y-o-y. The drop in total vacancy level was mainly due to demand recovery in the first six months of the year, driven by several large transactions in new completions.
Large transactions help improve the net absorption
Compared to the 1H21, weak demand clouded the market in 3Q21 due to the impact of the pandemic and economic uncertainties. Besides, strict social distancing measures barred tenants from site visiting activities. Yet, Hanoi Office Grade A & B still managed to record positive net absorption, around 600 sqm in 3Q21, mostly thank to large technology and energy industry transactions in high specification buildings.
Rents remain constant across the market
In general, the average net rent of Grade A & B across the market held flat at USD 18.7/sqm/month. In 3Q21, JLL recorded no decrease in the asking rent. Yet, landlords tend to offer attractive incentives and flexible leasing terms to attract new tenants and secure occupancy in this challenging period.
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Outlook: Rents keep constant or decrease slightly, improving demand
As social distancing measures are relaxed gradually and construction activities resumes, the market will welcome 117,000 sqm NLA from Technopark Tower in Gia Lam in early 4Q21.
Rent is expected to stay stable or slightly decrease to improve the demand in the short and medium-term. In addition, corporate tenants with well-performing businesses such as technology and e-commerce will continue to be the demand driver.
- Rents refer to average net rent of the Grade A and B office markets, excluding VAT and service charges.
- CBD area consists of Hoan Kiem (core CBD), Dong Da, Ba Dinh and Hai Ba Trung. Non-CBD area refers to the rest of the city.
Source: JLL Research