While a lot of companies and enterprises want to lease offices in the capital, estimates put the unoccupied office area at more than 10 percent of the space available.
The supply doesn’t meet demand because landlords are reluctant to accommodate customers wanting sweeter leasing fees during the financial recession.
Thu Le, a city media company executive, has tried to lease 500-600sq.m of office space for $20 per square metre. Her delight when the landlord of a Kim Ma Street building quoted $18 quickly soured when she realized the fee excluded service charges and tax.
Thu said the fee was high, the quality wasn’t good, parking was restricted and staff would be on different floors.
Experienced city real estate staff in Ha Noi said Le’s demand was common. Customers wanted to hire an office at $20-22 per sq.m in towers with perfect services.
Most customers think they can pressure landlords into a lease at a lower fee when the going rate for their requirements is about $35. The rate is the same or higher than last year.
EZ Viet Nam director Pham But Toan said his company faced difficulties accommodating clients’ expectations and couldn’t meet the demands of a client who wanted the same fee when moving from a 60sq.m office in a Hai Ba Trung District tower to 100sq.m in a Hoan Kiem District street.
Demand for space is growing but so is supply. By the end of the year, the city will have an extra 200,000sq.m of office space. Most will be considered B or C grade.
A report from prominent real estate company Savills shows the economic crisis has strongly affected the real estate market and the gap between high demand and an abundant supply isn’t closing.
In HCM City, investors of a lot of office towers have halved leasing fees (the rate is $40-50 for A class offices) in order to entice more clients. Investors in Ha Noi have been trying to keep leasing fees high but in some cases have accepted drops up to 20 percent.
In Ha Noi, B grade offices in prominent positions are still offered at nearly $40 per sq.m while for C grade offices on Mai Hac De”, Le Dai Hanh and Pham Hung streets the decrease has been a modest $3-5 per sq.m. Bao Manh, a sales director of real estate centre Golden Art Housing, suggested small and medium-sized companies lease B and C grades offices and then look to upgrade. That way, supply could meet the demand. Hiring small house and apartments on building blocks was a good alternative during the recession, he said.
