Hanoi Office Market Overview for Q2 2024
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Despite slow leasing performance in Hanoi’s office market, landlords maintain high asking rents
Knight Frank Vietnam reports that Grade A office rents in Hanoi remained relatively unchanged from the previous quarter in Q2 2024, with asking rents staying at US$30 per sqm per month. This stability is attributed to the launch of one Grade A office building, Grand Terra (36 Cat Linh, Dong Da District). Similarly, the Grade B office segment experienced stable rents, with asking rents remaining at US$15 per sqm per month and no new introductions to the market. The company anticipates vacancy levels to increase as new supply arrives on the market.
“The Hanoi office market is moving slowly and the number of site inspection requests is less than half of what it was this time last year. There are a number of newer buildings with an occupancy rate of 30% or less raise questions about the state of the market. Supply will increase through Q3 and Q4 this year when new projects like Heritage West Lake and the Taisei Hanoi Office Tower are completed. To attract new tenants, landlords need a solid leasing plans that include incentives and competitive rents. Tenants are pushing very hard in negotiations with landlords, as they expect rents to drop further in the next 12 months,” said Leo Nguyen, Director of Occupier Strategy and Solutions at Knight Frank Vietnam.
The vacancy rate remained high across the market at 18.4%, an increase of 0.5% q-o-q. This indicates a very slow net take-up at newly launched buildings combined with new vacant space from the Grand Terra project added in Q2 2024. The Grade A vacancy rate in Hanoi’s office market remained the highest at 23.3%, an increase of 1.8% q-o-q. Grade B’s vacancy rate stayed at 16.6%, which is still relatively high in Q2 2024. Knight Frank forecast Grade A vacancy to rise to as much as 30% by the end of 2024 as new supply arrives.
“In recent years, there has been an unmistakable shift among multinational corporations towards embracing corporate social responsibility and environmental sustainability. These firms are gravitating towards green-certified office buildings that meet their rigorous sustainability benchmarks. The emphasis on employee well-being is driving MNCs to seek office environments that are not only sustainable but also enhance the overall work experience. Key aspects such as superior indoor air quality, abundant natural lighting, and green spaces have become crucial factors in their decision-making. Illustrating this trend, Heritage West Lake will soon be recognised as Hanoi’s first WELL pre-certified office tower, setting a new standard for sustainable workplaces in the city,” added Leo Nguyen.
Two new Grade A projects are expected to enter the market by the end of 2024: Taisei Hanoi Office Tower in Cau Giay District and Heritage West Lake in Tay Ho District. These developments should contribute approximately 46,000 sqm of new office space. From 2025 to 2026, the market is expected to welcome over 90,000 sqm of office space from projects such as Tien Bo Plaza in Dong Da district, Hanoi Hilton West, and Shilla Hotel in the West Westlake area.
