Pandemic & Rise in Office Supply in Q3 Pulls Occupancy Rate Down by 4.6% Q-o-Q

• 21 October 2021
• Local News
• 791 Views

The office market in Phnom Penh in Q3 remains under pressure with a 4.6% q-o-q drop in occupancy rates, and a 1.9% to 2.8% decrease of quoted rental prices across various types, according to CBRE Cambodia’s recent report.

Given the current situation, landlords should be cautious of risks only not from the high vacancies caused by the pandemic but also oversupply, added the report.

In Q3, there were a total of seven completions, equivalent to a total of over 61,000 sqm. These completions have bought a total supply of offices in Phnom Penh to 786, 931 sqm of NLA as of Q3, and most of them are centrally owned.

By year-end, supply is expected to rise to over 790,000 sqm, an increase of 147,000 sqm y-o-y (24% are strata title). By 2022, the number is projected to increase to 1 million, of which strata title office types will contribute 36%.

With the increasing supply and the pressure from the pandemic, demand is also declining. Meanwhile, remaining tenants are also shifting toward options that offer a mixture of quality and value, said the report.

Thus, grade, location, rental rate, and incentive are playing a key role for landlords to compete in the market, the report added.

• Analysis