Older office buildings in the central business district (CBD) are accelerating renovations or shifting to alternative uses after major tenants relocated to newer Grade A towers, according to property consultancy Cushman & Wakefield Thailand.
Aukit Pronpattanapairoj, head of office leasing at the consultancy, said older buildings need to upgrade their spaces to stay competitive in a market where tenants have greater bargaining power amid a large supply of office space, particularly Grade A in the CBD.
"The relocation of major tenants is driven not only by newer, more modern buildings and more attractive rental rates, but also by the need for more contiguous floor plates rather than being spread across multiple levels," he said.
Some CBD office towers are also considering converting their buildings into hotels after major tenants in the financial sector, occupying around 10,000 square metres, plan to relocate to nearby Grade A offices by the end of the year, where they can operate from contiguous floors.
One building undergoing a major refurbishment following the departure of a key tenant is Abdulrahim Place, a 30-year-old, 34-storey office tower on Rama IV Road opposite Lumpini Park, aiming to retain existing tenants and attract new ones.
"Since the first quarter, the trend of rental discounts and flexible lease terms offered by new Grade A office buildings in the CBD during their ramp-up phase has begun to cool, as occupancy rates reached 80-85%," said Mr Aukit.
However, it remains a tenant's market, with 575,310 sq m of new supply expected between 2026 and 2031, of which 62.5% or 359,310 sq m is Grade A space in the CBD.
The Bangkok office market in the first quarter of 2026 recorded 154,500 sq m of new supply, all outside the CBD.
The vacancy rate for Grade A office space edged down to 23.3% from 23.8% in the fourth quarter of 2025, indicating a modest improvement. However, vacancy could rise to 30% given the large pipeline through 2031, noted the consultancy.
He said Bangkok's office market slowed, particularly on the supply side, as new completions in 2025 were significantly lower than in 2024.
New office supply in 2025 tallied 101,000 sq m, down 84% from 615,400 sq m in 2024 when a large volume of projects was completed.
"The drop in new supply is positive for the market, easing pressure from new buildings and reducing competition from periods of heavy completions," said Mr Aukit.
The office market is expected to stabilise this year, moving towards a more balanced position between landlords and tenants.
"While the market may appear more balanced, tenants still retain bargaining power, particularly in buildings with high vacancy or those that recently lost anchor tenants," he said.
Average rents, particularly in Grade A buildings, remained largely unchanged, standing at 943 baht per sq m per month in the first quarter of 2026.
Leasing activity this year is expected to remain competitive, but limited new supply should help ease pressure on landlords, while vacancy rates are likely to decline gradually, signalling a recovery.
"However, global economic conditions will remain a key factor shaping the market, with tenants continuing to hold leverage and decisions increasingly based on overall lease value rather than rental rates alone," Mr Aukit said.
Mr Aukit says major tenants are relocating to newer buildings, partially because they want more contiguous floor plates.
