With the arrival of multinational companies into the Kingdom’s capital, as well as competition among domestic companies looking to improve their professional image, the past five years have seen a demand for quality office space, according to a recent real estate study by CBRE Cambodia. And this demand is slowly being filled up with the entrance of Grade A office buildings this year.
“Office buildings across both B and C grades have largely seen a steady growth in rental rates since 2012,” the recent CBRE report read, adding that the bulk of office occupancy still falls into the Grade C category at 52 per cent.
However, with Grade A office supply accounting for 15 per cent of total leasable space, renting out at $28 per square metre according to the report, there is still some ambiguity towards what defines the rating system that commands higher rental values.
“While there’s no single, universally recognised grading system for office buildings, Grade A [office space] would typically imply a prominent, flagship building, generally making a notable contribution to a city’s skyline, in addition to meeting a variety of wider specifications and standards,” said Chris Hobden, manager of CBRE Cambodia.
However, he continued, there is no reason that a well-designed building of a smaller size atypical of traditionally large office towers – such as Canadia Tower (Grade B), Phnom Penh Tower (Grade B), and Vattanac Tower (Grade A) – cannot fulfill the Grade A requirements, and attract similar occupiers or command comparable rents.
“Occupiers are often mindful of how a building can reflect their overall image and the role it plays in attracting and retaining staff,” explained Hobden.
However, while the iconic landmark buildings of Phnom Penh are easily distinguishable when viewing the capital’s skyline, less pronounced projects are preparing to leap into the office sector.
Local developer Urbanland recently confirmed rumours of its first venture into the commercial office market in the wake of its two residential projects, Embassy Residences and Embassy Central.
“This boutique development will take a fresh approach to workspace that is design-conscious and community-focused to serve a dynamic community of entrepreneurs and professionals alike,” said Hok Kang, managing director of Urbanland.
Aspiring to utilise the quality that has defined their residential projects, Urbanland’s latest office project, of which the name and exact location has yet to be disclosed, will combine design experience from London, Kuala Lumpur, and Miami, according to Kang.
Although vastly different from the typical large office buildings of Grade A quality – such as the one and only Vattanac Tower – with only five storeys, this development will be situated near the upcoming Exchange Square by Hongkong Land.
With a slated date of completion for July of this year, Kang said “it is definitely Grade A as far as we define it, taking into account property management quality, facilities, health and safety standards, and aesthetic design.”
Nevertheless, CBRE’s Hobden said, “the only Grade A [rated] office building to come on stream in the near future is Hongkong Land’s Exchange Square, a flagship, mixed-use development comprising 18,000 square metres of leasable office space, in addition to 8,000 square metres of prime retail,” adding that the development – for which CBRE is a leasing agent – is currently underway, with completion on track at the end of 2016.
“You can see clear examples of buildings designed internationally or located specifically with a view to attract a particular sector or industry,” Hobden said.
With two planned arrivals to the Grade A supply and as Phnom Penh’s office market continues to mature, it appears new players will come in and give Vattanac Tower a run for its money.