Office occupancy rates increases in 2022’s Q3

Since the economic crisis that affected countries worldwide, Cambodia has seen a decline in occupancy of offices. This is particularly true during 2020, where real estate construction for numerous projects staggered and only a few continued to completion. While projects restarted and were finished in 2021 and more were launched, office occupancy rates fell. 

According to research conducted by Cambodia Investment Review, office occupancy rates were at 87% in 2019 but drastically fell to 66.9% in the first quarter of 2022. Currently, in the Q3 of 2022, the occupancy rate for offices is at 69.4%.

However, while the office occupancy rates alone look bad, it’s not indicative of the whole commercial real estate market. One of the things investors should factor in when checking these occupancy rates is the total number of existing office supply between 2019 to 2022. Currently, there are more than 856,000 square meters of office space available in Phnom Penh alone, which already factored in the three office buildings that were completed between January to March.

Besides these projects, Cambodia Investment Review predicted over 35,000 square meters of office supply will be added before 2022 ends. Moreover, as other industries like retail projects continue to increase yearly, it’s only expected for more office buildings to be launched in the coming years.

Office rent prices remain steady

While there are more offices in the country, the rental prices for offices within the Central Business District of Phnom Penh have remained steady. Grade A buildings retained its $27 per sqm, while Grade B buildings continued at $23 per sqm. Additionally, Grade C buildings remained at $15 per sqm.

However, offices outside of the CBD lowered its rental prices a bit due to the excess supply. Currently Grade B buildings are priced at $15 per sqm, which is 8.7% lower than before. Following that, Grade C buildings outside the CBD are priced now at $13 per sqm, which is 3.1% lower.

Office occupancy rates on the road to recovery

Given the ongoing and upcoming office projects, numerous businesses have shown interest in renting offices within Phnom Penh and other areas of Cambodia. According to our research to see the property trends in the Q3 of 2022, offices have the strongest demands.

The demand for offices comes primarily from businesses who are looking to relocate to another office or location within the country and those who want to start their own businesses. Besides them, since Cambodia has opened the country again to trades, foreign businesses, and more, there are a number of international companies looking to set up their own branch within the country.

In short, even if office occupancy increases due to high demand, as long as office supply increases in the coming years, the occupancy rate might not reach what it was in 2019. However, it’s only expected for the real estate market, specifically in the commercial and office sector, to increase demand moving forward. And while there are more offices that investors can choose from, it’s best to find the one that suits the business specifically so make sure to check our office listings.