Vietnam Coworking Space Landscape in H1 2019
The number of coworking and serviced offices in Vietnam is set to break through the 100,000 square meters (m2) and 50,000m2 barriers in Ho Chi Minh City and Hanoi respectively.
“The growth in flexible space demand is no secret and Vietnam is keeping pace with the global trend. We have seen an explosion of flexible space in 2019 taking the number of centres to approximately 175 operating across the two cities by the end of the year,” comments Alex Crane, Managing Director of Cushman & Wakefield Vietnam.
The flexible office industry now occupies approximately 85,000m2 of space in A and B grade buildings across the two office hub cities, less than 4% of total A and B grade inventory. Crane adds “This is a relatively small proportion of the total inventory and we anticipate this doubling in the next 18 months. New office supply in both cities will offer opportunities for the flexible space providers to grow into. Flexible office space providers are often the earliest occupiers to sign up for pre-leases in new office towers, where they can offset capex and be early to the market for their corporate occupiers which gives them assurance on performance but also for developers in the lease-up phase of new projects.”
Flexible working has been a global trend in commercial real estate for a number of years, and Vietnam has been quick to accommodate this with local, regional and global providers all vying for market share of centres and total square meters of space offered. One such local provider is Sonatus Building, a brand new office building in Ho Chi Minh City’s CBD, which is set to open in September.
Flexible space has become popular with multinational office occupiers as they are able to sign shorter, lower risk contracts and also benefit from fitted space.
Fit out Cost Packages
Crane says there has been an offshoot into the market driven by this trend: “With flexible office providers offering fitted premises to their clients, many have sought a capital contribution from developers to in-turn assist with fitting out the entire centre. This is a new and interesting trend for the office market. Until now, landlords and developers have rarely offered occupiers financial assistance with fit out costs. But with the competition and demand from flexible office providers, we are seeing more developers build financial packages to allure flexible office occupiers who are becoming good anchor tenants for new developments. This is a direct sign of the market becoming far more sophisticated and in line with regional and global trends.”