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Lack of Space, Booming Tech Scene Drive Saigon's Office Rents to Highest in 5 Years

Driven by a dearth of suitable office space and the flourishing of local companies, the monthly cost to rent an office in central Saigon is skyrocketing.

According to research by real estate consulting firm Jones Lang LaSalle Vietnam (JLL), on average, Grade A office buildings cost local companies US$50 per square meter per month in Q3 of 2018. This amounts to a 7% year-on-year increase, VnExpress reports.

In some prime locations in the central business district, the rent could climb up to US$70 per square meter per month, the highest rates in nearly half a decade. Down a level, Grade B offices in District 1 and 3 have also seen a rise in rent to US$30 per square meter monthly.

At the moment, for the two above-mentioned office categories, the occupancy rates are very high at 95% (Grade A) and 96.5% (Grade B). There are around 20 criteria to determine the grade of an office building. For example, buildings must have at least two parking basements and central climate control, among other amenities to be considered Grade A.

The report explains that the recent development in information technology, e-commerce and coworking in Saigon has given rise to many new enterprises — both domestic and international — quickly filling up available space. Monthly rents in the city are expected to increase gradually in the near future as a crop of 11 new buildings might only finish in 2019-2020.

Regionally, Southeast Asia’s demand for office space is increasing 6% a year, while this figure is 10% for Saigon as the city shifts to more service- and tech-centric industries. The city’s hunger for office space will persist for at least ten years, according to the JLL report.

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