HCMC’s flexible working space increases, occupancy decreases

Ho Chi Minh City’s flexible working space by the end of July recorded a 20% increase in supply citywide against the end of last year, driven primarily by major new premium centers located in the city's center, according to Knight Frank Vietnam.

Its third annual study released on Wednesday showed that HCMC now has 120 flexible workspace centers managed by 28 operators, with five more slated to open by year's end. Notable additions include two new flex-spaces in The Nexus, totaling 1,908 square meters, and a 1,063-square-meter project in Bitexco Financial Tower.

The rush of premium supply saw a downfall in absorption this year, with occupancy falling from 81% in last year’s study to 73% this year. However, Knight Frank would expect that to decrease by year’s end as new tenants fill highly sought after available space.

“Even with this influx of central supply, central locations reported occupancy of around 85%, while non-CBD locations hovered around 70%, highlighting just how robust demand is for these locations,” said Leo Nguyen, director of occupier strategy and solutions at the consulting firm.

“We expect this space to be relatively quickly filled, with central locations likely to return to full capacity, driving up the citywide average," said Nguyen.

Flex space rents in HCMC rose 4.5% year-on-year to an average of $219 per person per month. Grade A centers, which are particularly sought after by multinational tenants, saw even higher growth, with average rents reaching $344 per person per month.

Non-CBD locations tend to be dominated by the small and medium enterprises and start-up sector, with the emergence of new players offering a more diverse working environment than traditional serviced offices and co-working offices and hot-desks.

“Technology and innovative startups have always been our focus,” said Greg Ohan, CEO and co-pioneer of The Sentry, which offers eco-friendly workspaces in HCMC.

“We've seen significant growth in the IT outsourcing sector, with game developers and AI startups being particularly prominent. To accommodate this demand, we have established a partnership with RMIT that works as an incubator and accelerator for startups led by young entrepreneurs. We will also be developing a 10-floor facility in District 12 with three floors dedicated to co-working space, with these technology businesses in mind,” he added.

This maps with wider trends Knight Frank has observed within the market, with newer businesses looking further afield for affordable spaces with access to emerging nearby tech parks.

“We have seen rapid growth from some brands with non-central locations offering average pricing of $96 per person per month, notably in Thu Duc city and District 12, where operators are seeking to diversify their offering beyond simple workspaces to services including training, development, and team building for startups,” Nguyen commented.