The growth of local startups as well as more international companies seeking a presence in Cambodia is fuelling the demand for office space, but industry experts say rentals are being held static by a steady supply of new developments.
“Although there is higher demand, rents for office space are not rising compared to the same period last year,” said Grace Rachny Fong, CEO of realtors Century21 Cambodia.
When local media company Quantum Communications went looking for a new home earlier this year, they found they were very definitely in the driving seat.
Having outgrown their old office near Russian Federation Boulevard, CEO Julian Rake wanted something that would be light and airy, preferably in a stylish building in a good area.
“There was definitely a lot out there to look at,” said Rake, from the company’s new office above Brown’s coffee shop on Sisowath Quay.
“We had time on our hands, so we were very careful we got exactly what we want.”
Not only did they get a bigger office, Rake said he was also surprised to discover rents had come down.
“Overall it was a good experience for us,” he said. “The hassle of moving was definitely offset by the fact we now have the space we need in an area we all like – and it is cheaper as well.”
The available office space in Phnom Penh rose by over 60,000 square metres to 355,000 in the first quarter of 2018 compared to last year, figures compiled by CBRE show, but rentals dipped marginally to $15.1 per square foot from $15.2.
CBRE estimates around 90,000 square meters of new office space will come on to the market before the end of the year.
Underlying figures do not tell the full story of the office rental market, however.
Realtors said availability, vacancies, demand and cost differed across classes of property, with so-called “Grade B” premises – with rentals in the range $14-$21 per square metre – the most popular.
“The Grade B sector is showing particular strength, with vacancies falling from 26 percent a year ago to 10.5 percent today,” said James Hodge, Associate director of CBRE Cambodia.
Chrek Soknim, CEO of realtor Century21 Mekong agreed.
“Grade B office buildings are the most popular of all . . . sometimes, it is almost impossible to find one,” he said.
One such development, TK Royal One, opened for business along Russian Federation Boulevard in the first week of May and has already rented out some 2,500 square metres of office space – around 40 percent of what is available.
“The demand of office space in Cambodia is growing, but a successful office building also needs to rely on the quality of its services,” said Chenyi Chiu, General Manager of the development, which also boasts 146 condo units as well as shops and cafés.
Century21 Mekong’s Chrek said he expected demand for office space to grow by 10 percent – 20 percent in 2018 compared to the same period last year.
“This increase is because there are more and more small and medium enterprises looking for space,” he said. “The increase is also motivated by the arrival of international companies, especially those from China.”