Bangkok Office Demand Rebounds, but Tenants Retain Strong Negotiating Power
Bangkok's office market demand is recovering as tenants increasingly prioritize quality and efficiency, but strong negotiating power keeps rents flat at 847 baht per square meter monthly while widening the gap between Grade A and older prop
Knight Frank Thailand indicates that Bangkok office market demand is beginning to recover, with the crucial turning point being changing tenant behavior that values quality and long-term efficiency. This has created a widening performance gap between Grade A properties and older buildings, while average rental rates have declined slightly to 847 baht per square meter per month.
On May 7, 2025, Panya Chenkitvatanalert, partner and managing director of Knight Frank Thailand's office division, revealed that despite market concerns about future oversupply of office space, the latest Knight Frank report shows Bangkok's office market is undergoing a deeper transformation. Demand is gradually recovering, but the key turning point centers on tenant behavior adjustments.
Leasing activity has clearly improved, with approximately 111,000 square meters of space leased and net absorption at around 70,000 square meters. This pushed the market's overall occupancy rate to 77.6%, continuing its increase into the second quarter.
However, despite improving demand, the market faces intense competition from new supply entering continuously, keeping tenants in a strong negotiating position. Building owners cannot raise rents, with average asking rents declining slightly by 0.4% quarter-on-quarter to 847 baht per square meter monthly.
The market's key issue is the widening "efficiency gap" between new and older buildings. Grade A and new buildings continue attracting demand, while older properties face mounting competitive pressure.
Today's tenants are no longer simply expanding space for growth; they make more selective decisions prioritizing building quality, user experience, and long-term cost efficiency. This concentrates demand in high-quality buildings and intensifies market differentiation.
Meanwhile, high-quality office development outside the CBD provides tenants more options and opportunities to manage costs effectively while maintaining space standards.
Short-term market trends suggest Bangkok's office market will remain tenant-favorable, as significant new supply completing in 2025 continues creating competitive pressure. Even with recovering demand, market rebalancing may take time as tenants remain cautious about space expansion.
"This market's turning point isn't about leasing volume, but about tenant thinking," Panya stated, noting tenants are increasingly selective, considering quality, costs, and long-term suitability—widening the gap between premium and older buildings and reshaping the entire competitive landscape.