Knight Frank Chartered (Thailand) Co Ltd

Office Market Q2 2025

Market Overview

Thailand’s economy is projected to grow by 2.3% in 2025 and 1.7% in 2026 according to the Bank of Thailand. The 2025 projection reflects a stronger-than-expected performance in Q1 and positive economic indicators in Q2. Export growth, particularly in electronics and front-loaded goods to the United States, has supported the manufacturing and related service sectors. However, the economy is expected to slow in H2 2025, as exports face pressure from U.S. tariffs and private consumption moderates due to softening income and consumer confidence. While the projected number of tourist arrivals has been revised downward, tourism revenue continues to increase as spending per visitor rises. At the same time, some domestic business sectors are under pressure from rising import competition and shifting consumer preferences.

In Q2 2025, the Business Sentiment Index (BSI) declined from the previous quarter, driven mainly by the non-manufacturing sector, especially tourism-related businesses, as foreign tourist arrivals dropped sharply. The three-month expected BSI also fell from the previous quarter, reflecting growing uncertainties such as the impact of U.S. reciprocal tariffs and ongoing safety concerns. As a result, confidence in the hotel and restaurant sectors declined to a three-year low.

Supply

Total supply of office space for rent in Bangkok increased by 1.7% QoQ to reach 6.42 million sq m. Four new buildings, APAC Tower, KingBridge Tower, BTS Visionary Park, and One Origin Sanampao, were completed, adding around 180,000 sq m of new space to the market. At the same time, several older buildings were removed due to obsolescence. Total supply of green space grew by 8.4% to 2.28 million sq m, as all newly completed projects are either certified or targeting LEED Gold.

Future Supply

Following recent completions, the future supply pipeline has declined to 930,000 sq m, as no new projects were announced this quarter. Approximately 660,000 sq m is currently under construction, with no new ground-breaking from planned developments during the period. Around 250,000 sq m is still expected to enter the market in H2 2025, primarily in non-CBD areas, as the completion of One Bangkok Tower 5 is now scheduled in early 2026.

Demand

Leasing activity was exceptionally strong this quarter, with nearly 200,000 sq m of take-up. Net absorption rose to 67,000 sq m, leading to a 1% increase in total occupied space to 4.93 million sq m. However, it is worth noting that both BTS Visionary Park and KingBridge Tower include significant owner-occupied space, accounting for approximately 50,000 sq m of the take-up. Green buildings continued to outperform non-green ones, recording 115,000 sq m in net absorption, while non-green buildings saw a contraction of 48,000 sq m.

Market Dynamics by Segment

Although Q2 saw strong demand, new supply outpaced take-up, resulting in a 0.7% pts decline in the overall occupancy rate to 76.8%. Occupancy dropped across both grade A and B buildings, decreasing by 0.4% and 1.6% respectively. In contrast, grade C spaces recorded a 0.7% increase to 80.5%, supported by limited new supply and continued cost-conscious decisions among occupiers. Grade B buildings continue to face heightened competition for tenants, with the occupancy rate falling further to 74%.

The market average asking rent increased slightly to THB 847 per sq m per month. However, rents declined across both Grade A and B segments. Grade A rents fell by 1.2% to THB 1,233, while Grade B rents dropped by 0.7% to THB 866. Grade C rents remained stable at THB 543. The rise in the overall market average, despite declines within the segments, is largely driven by the entry of new buildings that are priced below existing peers in their respective grades but still above the overall market average. At the same time, some of the higher-priced existing buildings within each grade are adjusting rents downward to remain competitive. This dual trend is compressing rents within segments while lifting the overall average.

Market Dynamics by Area

The CBD office market posted a moderate rental decline, with the average asking rent falling 1.3% QoQ to THB 957 per sq m per month. The occupancy rate also fell to 76%, down 0.6% pts. QoQ.

• Ploenchit–Chidlom–Wireless saw rents drop 2.6% to THB 1,062, while occupancy remained flat at 76%.
• Nana–Asoke–Phrompong recorded a 1.2% rental decline to THB 933, while occupancy rose 1.3% pts. to 81%.
• Silom–Sathorn–Rama IV posted no change in rents at THB 971, while occupancy fell by 0.5% pts. to 75%.

The Non-CBD market recorded rental growth, with average asking rents rising 2.2% QoQ to THB 688 per sq m per month. However, Occupancy fell to 78%, declining by 0.7% pts. QoQ.

• Petchburi–Rama IX–Ratchada saw rents rise 0.2% to THB 730, with occupancy improving 1.0% pts. to 81%.
• Phaholyothin–Viphavadi recorded the highest rental growth, up 5.8% to THB 722, though occupancy dropped significantly by 6.2% pts. to 71%. The significant change is the result of BTS Visionary Park and One Origin Sanampao market entry.
• Bangna–Srinakarin posted a 0.7% rental increase to THB 624 and an occupancy decline of 0.9% pts. to 70%.

Review & Outlook

Q2 2025 was a strong quarter for Bangkok’s office market, with nearly 200,000 sq m of leasing activity and net absorption rising to 67,000 sq m. Much of this take up, however, came from owner-occupied space in newly completed buildings, namely BTS Visionary Park and KingBridge Tower. This does highlight a significant trend: Many corporations remain committed to securing high-quality office environments and some have demonstrated the capacity to invest in development for their own use, as well as to capture demand to lease such spaces. The continued expansion of green-certified supply, now reaching 2.28 million sq m, and strong leasing performance also reflects the ongoing preference for sustainability and operational resilience.

Despite a robust quarter, the outlook for the remainder of the year is more cautious. While the Myanmar earthquake in March initially raised safety concerns and prompted occupiers to reevaluate emergency preparedness, these disruptions are not expected to have lasting impacts on the market. More pressing are the ongoing macroeconomic headwinds, as Thailand’s economy is projected to slow in the second half of 2025. In response, many tenants are delaying major real estate decisions, opting for more caution. Even firms not directly involved in exports are anticipating second-order effects, such as reduced domestic demand, delayed investment decisions, and tighter cost controls. These factors may subdue some of the leasing momentum in the coming quarters.

With approximately 250,000 sq m of new space still slated for completion in H2 2025, competition will continue to intensify. Recognizing the increasingly tenant-favorable market and the urgency to secure occupancy ahead of further economic headwinds, more buildings are offering flexible leasing terms and fit-out support. These concessions reflect a broader understanding that securing tenants now, even at compressed rents or with greater flexibility, is critical to maintaining cash flow and long-term competitiveness.

Panya Jenkitvathanalert, partner - head of office strategy and solutions, commented: “The market today underscores the challenges facing landlords—not only from the influx of new supply but also from evolving tenant expectations amid economic uncertainty. Offering greater lease flexibility, fit-out support, or value-added services will be critical in differentiating buildings and sustaining occupancy over the long term.”