Revitalising aged office buildings in Bangkok's city centre
Unlocking potential: Exploring transformative opportunities for landlords to repurpose old buildings, shaping the future of Bangkok’s CBA.
Bangkok’s office market is experiencing a “flight-to-quality” trend, with over 70% of space in the Central Business Areas (CBA) over 20 years old. This space is equivalent to approximately 3 million sqm (NLA). With the anticipation of more than 25% of existing supply entering the market by 2028, what alternatives do landlords have to revitalise their aged office spaces?
Figure 1: Bangkok’s for-lease office stock by age groups
Source: JLL Thailand Research and Consulting, 2Q23
Remark: Map shown above does not include owner-occupied and built-to-suit office buildings
The demand for data centres is rising in Bangkok, driven by the banking, telecommunications and government sectors. The growth of digital infrastructure has fueled the need to develop seamless customer experiences, such as mobile banking, digital service platforms and digital identification systems. By locating data processing warehouses close to the headquarters of private-sector companies, it will help enhance the operation quality by ensuring fast and stable performance, reducing the risks associated with network disruptions, and minimising operating costs compared to having a data centre outside the city.
With the emergence of new fields of education and types of courses, universities and educational institutions face challenges in expanding their campuses within or close to the CBA due to the limited availability and high land cost. This difficulty is further compounded by the work-study lifestyle of graduate students, requiring campuses located near their workplaces. Therefore, repurposing available spaces in existing buildings into educational spaces will increase the overall footfall in the building. Also, it will provide ease of access and connectivity with commercial spaces for students while fostering more innovation clusters in the city centre.
In Bangkok, high prices and reduced condominium sizes in the city centre have led to the need for additional space, driving the demand for self-storage. The growing expatriate population also contributes to this demand. Self-storage facilities located near residential and office areas cater to the storage needs of individuals, ensuring easy accessibility and convenience.
Figure 2: Potential conversion alternatives for aged office buildings
Source: Getty Images
Converting old office buildings is a complex process and the cost of renovation relies on the fitting purpose for which the building will be converted. The most suitable utilisation for the property will depend on the building's unique infrastructure and location. Given technical expertise, transforming aged office buildings is potentially profitable for landlords by attracting investors, acheiving higher rental rates, and capitalising on incentive benefits. A mixed-use approach can further create multi-purpose space, such as affordable housing, commercial space, hotels, co-working areas, wellness retreats, medical centers, entertainment venues, or even life-science laboratories. In order to determine the optimal use, a comprehensive examination of each building's condition and the benefits it brings to the area are crucial.