Office rental sentiment in the central business district (CBD) remains buoyant as demand for Grade A office space continues to grow.

According to David George, director for business space, valuation and research at property consultants Edmund Tie & Co Thailand, office rentals throughout Bangkok are expected to increase with strong demand from domestic and international companies.

"A number of tenants are moving into both the newly completed office projects and older buildings in CBD, with total net absorption in CBD rising to 10,814 square metres in the third quarter, up from a contraction of 1,833 sq m in the second quarter," he said.

There were no new CBD office launches in the third quarter. The only new introduction to the market from a non-CBD location was The Pearl Bangkok, which will be used mainly as the new head office of SET-listed developer Pruksa Real Estate Plc.

The 25-storey tower, located on Phahon Yothin Road near Ari skytrain station, offers 30,000 sq m of new office space.

Developments scheduled for completion between 2017 and 2019 include Gaysorn Office Tower II with 27,000 sq m, slated for completion in the second quarter 2017, The Singha Complex (50,596 sq m, 2018) and The Aspiration One (30,000 sq m, 2019).

Given tight existing supply, together with improving demand for office space, office rents continued to rise in the third quarter. Grade A office rents in CBD rose to 795 baht per sq m per month.

Among the prime Grade A buildings with high asking rents, Park Ventures on Phloenchit Road was the highest at 1,300 baht per sq m per month, followed by Exchange Tower and Bhiraj Tower on Sukhumvit Road, both of which listed asking rents of 1,200 baht.

Mr George said overall vacancy levels were expected to decline further due to limited available office space and only a few completed office buildings in the market recently.

Office occupancy rates were expected to increase with improving demand from domestic and international companies. Average asking rents were expected to continue to rise in the following quarter, but at a slower pace.

"We anticipate more companies will relocate from CBD to non-CBD locations that offer accessibility to CBD through mass rapid transport. This is mainly attributed to the limited availability of large office spaces in CBD and more potential supply in non-CBD."

For the retail sector, total supply in the downtown market remained unchanged in the third quarter. No additional retail supply in the downtown market was expected until the first quarter of next year.

Two retail projects, totalling 7,940 sq m, will be launched in the first quarter of 2017. The first is Gaysorn Tower II on Ratchadamri Road with 5,000 sq m of retail space for lease.

The other is Noble Ploenchit, located near Phloenchit skytrain station, with a net lettable area of 2,940 sq m.

Total stock in midtown market increased by 1.5% quarter-on-quarter to 891,739 sq m in the third quarter due to the introduction of a new retail project at G Tower office building on Rama IX Road, totalling 13,140 sq m retail space for rent.

Retail supply in midtown locations is expected to slow down for the remainder of 2016 partly due to the large influx of new retail supply earlier in the year.

In the fourth quarter, only 6,311 sq m of retail space was expected to be completed in the midtown market. Most of the new retail projects will be located in suburban locations, comprising 51,770 sq m of retail space for rent.

Occupancy levels for retail space in downtown areas decreased marginally to 90% in the third quarter from 90.1% in the second quarter. The average occupancy rate in midtown areas dipped due to an increase in stock in the third quarter.

Retail rental levels in both downtown and midtown areas remained unchanged as demand for retail space slowed down.

"Retail businesses are expected to recover in the fourth quarter, with occupancy levels in the downtown market expected to remain firm. Amid relatively strong leasing demand, average retail rents are expected to increase moderately."

With numerous retail projects completed in the past year, competition in the midtown market had increased significantly.

Nevertheless, the occupancy rate of retail properties in this market was expected to rise as tenants moved in to newly launched malls.

Major marketing events and promotional activities at all shopping malls have all been postponed or cancelled from now until the end of the year following the passing of His Majesty the King. This is expected to impinge on some business activities.