Office space at a premium as rentals soar

Office space rental prices have surged as high as 1000 percent in some Yangon townships, fuelling demand for office space alternatives in the commercial capital.

Growing foreign demand and a burgeoning start-up scene have increased demand for rental property by about 15pc year-on-year, creating an unyielding economy of scale of exorbitant rental prices and conditions.

To meet this demand, a number of executive serviced business centres offering flexible rental terms and more affordable rents have blossomed in the city.

Catherine Smith, director of the recently opened Hintha Business Centre in downtown Yangon said that such centres were a common part of a modern city business environment.

“Yangon has less than 60,000 square metres of Grade A office space suitable for international firms,” Ms Smith said. “Average monthly rentals are about US$80 per square metre, higher than in Singapore and other ASEAN countries.

“It’s not just high rents that create a barrier to entry – the (often) requirement to pay 12 months rent in advance is also prohibitive to many companies,” she added.

Hintha Business Centre offers a range of flexible renting options to fill the void in office space availability and affordability. From monthly to weekly or even daily rental, the centre has offices, hot desks, meeting/conference rooms and virtual office space rental for as little as US$100 a month.

The centre provides a one-stop shop for business needs from reception to internet and telephone connectivity and modern office furnishings and equipment including desks, chairs, filing and mailing systems as well as cleaners, security and receptionists.

Current clients include representative offices of foreign companies and smaller local companies and the business centre expects to see interest from foreign non-commercial organisations and businesses entering the market or expanding their operations.

The influx of foreign demand has greatly contributed to driving up both office and residential rental prices,” Ma Zin Myo Naing, an agent from Shwe Yi San, told The Myanmar Times said.

“A two-storey shop house of 1200 square feet in Tamwe township is been rented out for K20 million (about US$2000) per month this year, but the same place was rented out for K2.5 million (about US$250) for one month in the last three years,” she said.

The lack of supply of quality office space is driving businesses to seek creative alternatives to expensive and hard-to-come-by serviced officer tower leases, she added.

“People in need of office space might rent a condo, apartment or house instead. Among them, people like condos more than others, but the condo price too is growing,” Ma Zin Myo Naing said, citing an average 200pc increase year-on-year for condo rental prices.

Another newly opened executive business centre, My Yangon Office, has also experienced a rush of interest in flexible renting terms for office space, manager Wai Me Han said.

“Office alternatives are popular as the supply of quality of office space is so limited – you have to make do with what you have,” she said. “We have noticed the prices [in Yangon] are generally very high compared to what you get relative to other markets around the world.”

The draw card to business centres for corporations looking for initial, temporary or even expanding office space is the flexible lease terms offered, Wai Me Han said.

“[It is] a comprehensive full service option for clients that need to rent temporarily or require more assistance than can be obtained from a regular office set up,” she added.

Extending this advantage of a business community atmosphere with increased assistance for start-ups, Project Hub director Allison Morris said networking opportunities were a plus in shared work environments.

“We don’t have a typical member profile. We’ve got small teams that are starting non-profit organisations, freelance consultants working on peace-building in Myanmar, tech start-ups, journalists, and private sector consultants … [It] suits them because it’s the most affordable option in town and we provide them networking opportunities and other events that help them get connected in Yangon,” Ms Morris said, of the US$150 a month share office space at Project Hub.

Flexible rental term business centres like Hintha, My Yangon Office and Project Hub, have already seen a spike in demand for their services from clients unwilling to commit to paying up to $90 per square foot or shoulder the burden of completely renovating a residential apartment or condo.

Ko Min Min Soe of Mya Pan Thakhin real estate agency said that traditionally popular office towers like Sakura and Sule Centerpoint were charging rental fees equivalent to those in major global business hubs like Manhattan.

“These places are very famous for renting and most of the people want to get space there to open an office. But there is no more space because of the high rental demand,” he said.

“Last year the rental fee in Sakura tower was $60 for one square foot per month and it was increased to $90 this year,” Ko Min Min Soe said.

“We said that it could not be $90 because this was the same as the rent fee in Singapore.”

Source: Myanmar Times

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