According to Savills Vietnam, in the short term, tenants will dominate the market. Early tenants who decide will negotiate more favorable terms. Vacancy rates are expected to increase, providing leverage for reducing rental rates.
Ms. Tu Thi Hong An, Director of Ho Chi Minh City Commercial Leasing Department said, due to the effects of Covid-19 epidemic, tenant structure is gradually changing; from open spaces of shared offices to service offices, from service offices to hotel models, from support offices to home work. This is an opportunity for businesses to review their needs to pursue business goals. And also an opportunity for tenants in the coming period.
Talking about the investor’s response, the representative of this unit said that the developers of Class C projects tend to be more flexible in reducing rents and negotiating terms that are suitable for both parties. such as reducing -20% of rent in March. Meanwhile, developers of Grade A and B buildings have almost no action. Rent reductions are expected so that both developers and tenants can sustainably operate in the long term.
Developers will be willing to lower prices or make concessions on lease terms to attract and retain tenants. Especially the offers in exchange for a longer lease term.
As for tenants, although the global economy is at stake, tenants can still find opportunities in the context of an epidemic.
In the short term, tenants will dominate the market. Early tenants who decide will negotiate more favorable terms. Vacancy rates are expected to increase, providing leverage for reducing rental rates.
In the long run, businesses will likely rethink office operations and consider possibilities such as working from home, reducing floor space, and redesigning workplace flexibility.
Therefore, according to Savills, developers and tenants will discuss incentives in exchange for a longer lease term, towards long-term and sustainable business results for both. If you want to apply a discount or long-term discount, tenants need to consider commitment to a longer lease term to ensure the capacity of the building and share risks with the developer.
Activities of offices are being reviewed to ensure maintenance of performance. Working at a developer changes the need for office space as it did in the last decade, leading to a shift in demand out of high-priced areas.
The co-working space is heavily influenced by the open space design, fierce competition by alternative models and the risk of losing market share. According to Savills representative, in the coming time, traditional service office will be more popular and able to compete with market share with co-working space. Hotel operators are tending to convert hotel rooms into offices for rent. This model can last for at least 6 months when national borders are still closed. In the near future, similar models will likely continue to appear.
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