OFFICE rental prices continued to tumble in the first quarter of the year, dropping as much as a third from the end of 2009, according to figures from a national assessor’s group.
“I think the prices have continued to fall because the supply for office space for rent is much more than the demand,” Keuk Narin, general manger of the Bonna Realty Group and secretary of the National Valuers Association (NVA), told the Post Tuesday.
The prices are likely to continue to fall through the rest of the year, he said.
The NVA estimates that the best Grade A office space now rents for US$20 to $25 per square metre per month, down $10 from the final quarter of 2009. Grade B rentals now go for $7 to $11 a square metre, a drop of around $3. Grade C data are difficult to gather, as most of these properties are independently owned and operated.
Khoun Davy, finance manager for the Delano Business Centre, said Tuesday the asking price there was $15 per square metre per month, but that the centre was considering lowering the price because nobody’s interested.
“It’s so quiet,” he said. “It’s hard to attract clients to rent our space. We’ve had 70 percent of our renters from early 2009 until now. We’ve still got 30 percent [empty].
“We’re preparing next month to decrease the price from $15 to $8 per square metre per month,” he said. “The location is good. It’s probably the best location in Phnom Penh.”
Office space continued to sit empty with many new developments in the first quarter.
According to NVA figures, the Icon Professional Centre on Norodom Boulevard had rented only 26 percent of its space. The Delano Business
Centre, on streets 134 and 169, filled 70 percent at $15 per square metre per month. And the Attwood Business centre, near Phnom Penh airport, was reporting 61 percent occupancy.
Other companies reporting occupancy to NVA included: Canadia Tower at 28 percent in February; Bo Retra, 78 percent; Paragon Office Building, 25 percent; and Premier Office Centre, 68 percent.
More established properties reported better occupancies, such as the Intelligence Office Centre, which is 89 percent full, Hong Kong Centre at 91 percent, the Phnom Penh Centre with 96 percent and B-Ray Tower, which was also nearly full.
Despite the falling prices, Daniel Parkes, country manager for CB Richard Ellis (CBRE), said Tuesday that his company was optimistic demand would grow in the longer term.
“Demand will continue to grow in coming years from existing occupiers within the Phnom Penh market looking to upgrade their premises and business image, and also from new entrants from abroad,” he said.
Grade A office space is likely to continue to decline, Parkes added, as demand over the next five years increases.
CBRE has previously estimated that there will be demand for 200,000 square feet of office space by 2013, nearly double the existing space, as businesses look to upgrade offices and the economy grows, creating new companies.