The "wave" of returning premises and narrowing business areas appeared since the COVID-19 period. However, up to now, the return of premises comes from economic reasons such as decreased revenue, increased input costs, increased labor costs, many additional costs...
In addition, some beautiful premises are vacant due to high rental prices, businesses having difficulty doing business and being financially weak after the pandemic, so they suffered losses and went bankrupt and had to return the premises. Meanwhile, many premises owners are determined not to reduce the rent, even if they have to leave it empty for many months. This is also a paradox that makes many beautiful premises, especially in the central area, still vacant.
The corner area with two frontages on Nguyen Hue Street is becoming a "nice" place to post rental information.
Many experts believe that the situation of leaving premises empty rather than renting at low prices will continue because many premises owners are waiting for the recovery of the economy and tourism. Therefore, in many beautiful locations, due to the lack of common ground between the lessor and the lessee, the vacant premises are increasing. In the future, with rental prices continuing to stay high, by the end of 2023, business premises may be 50% vacant, especially commercial floors and beautiful premises on central streets.
This issue was also noted in CBRE's Q1/2023 office market report, which noted the return of large-scale downsizing and return of premises transactions, especially from many real estate investors facing financial difficulties.
This unit said that many office leasing transactions that were under negotiation were also temporarily delayed due to tenants cutting budgets or changing business plans. Meanwhile, some landlords are simultaneously offering additional premises that they had retained in the previous period. These factors, along with the current economic difficulties, have put pressure on the market when for the first time since the pandemic, new leased space is very limited, while the number of tenants returning and downsizing space has increased significantly.
This resulted in an increase of 3,500 m2 in Class A vacant area, while the new leasable area of Class B was just over 2,200 m2 (including nearly 3,800 m2 of the newly operational project).
Many beautiful premises on central streets are vacant because rents have not decreased.
Similarly, Cushman & Wakefield’s Q1 report showed that occupancy rates in Grade A and B offices fell 1.6 and 2.1 percentage points, respectively, mainly due to the difficult business situation that caused tenants to cut costs. This is also the first time since the pandemic that the number of businesses closing in Q1 exceeded the number of new and reopened businesses.
New and re-opened businesses counted about 56,946 companies, down 5.4% year-on-year, while temporarily closed and dissolved businesses reached 60,241 units, up 17.4% year-on-year in 2022. This development is creating great pressure on the office rental market.
Below are some photos recording the situation of vacant premises on many streets of Ho Chi Minh City:
The eDiGi brand - Apple's premium authorized retail store (APR) on Cong Xa Paris Street, right next to the City Post Office, has stopped operating since April 28, and the premises are still vacant.
The McDonald's store located on Cong Xa Paris Street, next to the City Post Office, was also closed during the peak of the COVID-19 pandemic. This space with a total area of over 600 square meters has also been vacant for nearly 2 years because it has not found a tenant.
Mellower Coffee, located in the Metropolitan building (Dong Khoi street), with a direct view of Notre Dame Cathedral, has also closed. It is known that the rent for space in this building can be up to 20,000 USD/month for an area of 200m2.
The 18x30 m corner house with 2 frontages on Nguyen Du and Cong Xa Paris streets is also empty of tenants. It is known that the rental price of this house is currently at 400 million VND/month.
Not far away, a Highland coffee shop has also closed.
This large space on the corner of the street used to be a bustling business location with a rental price of up to hundreds of millions of dong per month.
Opposite Highland is a 3-storey building with a ground floor and a ground floor that is also for rent.
Many of these beautiful premises on Pasteur Street are currently vacant, becoming places for posting rental ads.
A Japanese restaurant is in a mess of construction materials. This used to be a favorite destination of many young people a year ago.
In addition, many small premises in central streets such as Dong Khoi are also vacant and have not found tenants.
A large area at Lam Son Square Street is also vacant.
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