HCMC Office Market Q2 2021

No new supply

The market recorded no new supply in all grades. Two Grade B office buildings, including The Grace in District 7 and Pearl 5 in District 3, delayed the grand opening date to 3Q21 due to the impact of the fourth outbreak in the last month of 2Q21.

Large leases in new buildings continue to drive net absorption

Net absorption of Grade A & B offices in 2Q21 was over 5,000 m2. The majority of transactions in the quarter occurred in new buildings with lots of vacant space thanks to landlords offering attractive rental concession policies and dominated by the tenants in the technology, real estate, finance and advertising industries. The market has hardly recorded new set-up transactions, with the majority of transactions focusing on relocation and expansion.

Despite a positive net absorption, 2Q21 witnessed 23 out of 65 Grade B buildings experience a decrease in net absorption, with an average of one building increasing vacancy by 400 sqm in this quarter. The lingering pandemic has greatly affected the customers in this segment. JLL believes that early terminations, reduction in occupied areas or relocation to tighten budget will become popular trends in the near term.

Rents remain resilient

In 2Q21, the average rent of Grade A & B offices was recorded at USD 30.6/m2/month, stable q-o-q and down slightly y-o-y. Rents have remained resilient in most buildings across all segments as landlords still maintained sufficient occupancy rates. However, in the context of shrinking demand, newly completed buildings are still under pressure to fill vacancies, and therefore, continue to offer many attractive rental policies and flexible negotiation terms to attract new tenants.