Fierce competition from better-quality buildings made both B and C offices lower rents to maintain tenants.
According to Colliers International, from the beginning of the year, Danang office market has no new supply. As a result, the market is still small with about 85,000 square meters of office space across 24 buildings.
Of this total, the Indochina Riverside Tower is still the only Grade A building, providing approximately 6,219 square meters, or 7 percent of the market. Grade B and C buildings represent 46% and 47% of the market share.
With a total of about 55,700m2 from 17 projects, Hai Chau continues to be the main office supply (accounting for 73% market share), followed by Thanh Khe district with 20,600m2 from 4 projects.
In terms of both capacity and rent, in the past two years, only Grade A buildings have offered up to $ 18 / sq m / month, equivalent to a 6% increase.
In both Grade B and Grade C, rents dropped, from $ 10.99 to $ 10.70 per square meter per month and from $ 8.39 to $ 8.16 per square meter per month. “Fierce competition from better-quality buildings has forced both types of offices to cut prices in order to maintain the number of tenants,” Colliers International said.
Occupancy at Grade A office buildings remained unchanged since 2015, reaching 90%. Meanwhile, Grade B occupancy has increased from 83.5% to 90%; Grade C is from 67.6% to 83%.
Colliers International commented that the office market in Da Nang is still underdeveloped compared to Hanoi and Ho Chi Minh City. HCM due to supply and demand constraints. On future supply, only Grade B building Vietinbank has completed construction in 2016, however, it is unclear when the building will be officially leased. Other projects include the Hilton Bach Dang Complex and the Far East Meridien are either delayed or stopped construction without notice from the developers about the new schedule.
“However, with many major infrastructure projects being urgently completed for the preparations for the APEC Summit to be held in Da Nang in 2017, demand for office space will grow stronger.” , the study said.
List of office buildings for lease in Da Nang:
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