An office building project under construction in downtown HCMC - Photo: Dinh Dung

Falling office rentals have created conditions for many companies to come back to the center of HCMC after moving towards outlying areas for several years due to high office prices.

Besides new customers, the market has seen many enterprises shifting among office buildings of grades A, B and C and from old buildings to newly-built ones to enjoy better places and prices.

A survey of Colliers International shows that many companies, which signed office leasing contracts two or three years ago, are considering breaking the deals, accepting penalties to move to buildings of grade A or B with better facilities.

Late last year, Bitexco Financial Tower in District 1 attracted two big customers of adidas and Samsung, with the former leasing the ground floor for its showroom and another floor for office space. Meanwhile, Samsung moved its office from a building on Nguyen Du Street to three floors in the tower.

In fact, office rentals in the city have plunged by a half compared to those three years ago. The prices now are around US$32-43 per square meter of grade-A office, US$14-32 each square meter of grade B and US$10-25 per square meter of grade C.

The city now has 283 office buildings, providing around 1.8 million square meters. However, only over 150,000 square meters were leased last year compared to 220,000 square meters in 2010, according to CB Richard Ellis Vietnam (CBRE).

Concerning the market tendency, Chris Currie, director of CBRE’s office for lease unit, said falling office rentals over the past 12 quarters have offered reasonable prices and helped enterprises move back to central areas.

Property investors here have offered many incentives to customers, including longer free time, equipping supports and removal of penalties upon the premature termination of contracts.

Office rents used to hit over US$50 per square meter in the city center, placing a great burden on enterprises and forcing them to move to outlying areas, where rentals were around US$15 per square meter.

Lower office rents also help enterprises move from street-front houses to office buildings, especially those in the financial sector, Currie added.

A market for customers

Colliers International forecasts office supply to jump to 2.2 million square meters next year, including around 720,000 square meters of grade A offices of Time Squares, M&C Tower, Eden A and Vietcombank Tower projects.

Market observers said that the playground still tilted towards customers in 2012 while investors will continue facing difficulties and have to launch preferential policies to lure renters.

However, the supply may decline in the following years as many projects have been suspended.

Among 20 projects at prime-site areas in HCMC, only two have been completed, and two others, Eden A and Ben Thanh Towers, are underway while the remaining projects see no progress, CBRE said.

Currie of CBRE said the falling supply will prompt investors to change leasing strategy and the entire market will be different after the next 12 months.