As we all know, COVID-19 affected businesses globally and across all sectors. Next to the tourism industry we see that both the residential and commercial Real Estate are among some of the most affected sectors, in both a positive and negative way. In short, the real estate landscape may be forever changed as realtors need to adapt. In this article we will focus on commercial real estate more specifically office spaces and forecast what we believe the post-Covid-19 era will look like.
The ‘New Normal’ norm and its effect
At Lazudi we see a steep increase in demand for office spaces with Grade A buildings filling up rapidly, where the workplace has shifted from the office to WFH we see now a reverse trend where companies are converting into a hybrid model, and this is becoming very much the norm in Thailand. This change enables companies to downsize while they become very attractive employers for their team and new hires. Companies who downsize save on budgets and in return they can afford the Grade A buildings that are not that much more expensive compared to older office towers. This goes hand in hand with a safe building environment, lower ecological footprints, more important than ever before. Apart from the shift in office spaces, there we have seen an accelerated and continued growth in warehouses and self-storage spaces. Even during the Pandemic which actually fueled growth of E-commerce businesses.
This is in line with the information from the Real Estate Information Center (REIC), which stated that there would be an increase in office space investment as it gives buyers a continuous Return-of-investment (ROI). Although there is a significant increase in the supply of office spaces for the next 4-5 years, it will still be in demand as there is a boom in logistics businesses due to the growth of E-commerce during the pandemic from the previous years up till the present.
When asking the perspective of the expert, according to Bart Roger G Claeys, Executive Sales Director at Lazudi Thailand (Commercial Properties), “Grade A projects are in high demand as opposed to Grade B buildings which are struggling to reduce vacancy. The main reason is that the price difference between both is minimal, while the return in Grade A is huge. Not only are more and more companies looking at how to reduce global carbon emission, but they also want to make sure that their employees are happy to come to work and facilities in the proximity combined with a mixed retail offering can play a key factor in this. And since many companies are reducing the space they need by promoting a Hybrid model, it opens up budgets to cover the little extra cost in these new appealing projects.”
“Covid has certainly changed the office landscape, but offices are far from dead, and more and more companies are moving back to at least part-time work from the office. Maybe one of the biggest changes in the professional world is the rise of digital nomads, and Thailand is one of the best places in the world to work. Plenty of high-speed internet connections, affordable cost of living and good weather make Thailand a super popular destination. This, in return, boosts investment in Service Offices in all areas across Bangkok and even in remote areas that normally are only associated with tourism.”, added Bart Roger G Claeys.
After all, the impact of COVID-19 on commercial real estate in Thailand might not be as fatal as in other parts of the world, but it still had a massive impact on the local economy. It is a transitional period, and a great future lies ahead for Thailand’s commercial real estate, especially in the office space sector.
