Phnom Penh’s New Commercial Office Buildings and how to choose your next office
BY NIGEL DOUGHAN
W
ith the skyrocketing levels of construction in the Kingdom, it’s no wonder people are starting to compare buildings based on their “Grade.” Commercial buildings are categorized by their position on a comparative scale that rates them from A to C, based on a range of measureable traits. This rating scale, recognized internationally as the ‘be all and end all’ of building quality, determines where a new building fits in the market and influences the rental prices and the type of tenants it attracts. Cambodia is relatively new to this scale, and in the past the quality of office buildings has hovered around ‘C’, with very few buildings making it past entry level. Historically, office space in Phnom Penh was available in villas, shop houses, and low-quality small office buildings. Over the last decade, however, we have seen massive growth in the commercial office building market. About eight years ago, Canadia Tower opened and led the market for a few years until Phnom Penh Tower arrived and slightly surpassed it in quality. From there we waited several more years until Vattanac Tower opened and clearly overtook all that had come before it - the building proudly boasting it was Phnom Penh’s first Grade A office tower. Now we have Raintree and Exchange Square challenging the status quo for the best available office space. With many new buildings becoming available in the market, there is literally a smorgasbord of options available to a new market entrant. Here is a framework for people to be better equipped to compare different options and find the most appropriate solution for their office needs: For a building to be rated as Grade A, it must meet most of the following criteria: It must have high-quality building systems, such as fire services, power supply, lifts (elevators), security, air conditioning and ventilation and a building management system. It also needs to have high-quality design and construction, including appropriate ceiling heights, open floor plans, large floor plates, good natural lighting and professional common areas. Finally, to meet the Grade A standard a new building must be in a very prominent location, have high-quality building management, and readily have available all the facilities that a modern business would require. Pricing for this higher quality space starts at $25 per square metre and goes up from there.
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Grade B buildings generally fall short in more than a few of these categories. They may reside slightly further away from the CBD, have inferior systems, or be a little older. However, these buildings often make a very strong case to be chosen for office space. One major influencer is the price. Grade B Buildings are generally priced in the range of $15-$25 per square metre, including service charges. This can allow a larger company to make significant savings over Grade A space. Buildings that fall into the Grade C category are those older office buildings that don’t meet the above standards. They are generally lacking in safety features and quality services but still appeal to a certain segment of the market, usually those focussed on price. These spaces commonly rent for $10-$15 per square metre and are in abundant supply around Phnom Penh. In Phnom Penh, we have Vattanac Tower, Exchange Square, and Raintree as the only potential Grade A buildings. Vattanac is very impressive from the outside but remains largely unoccupied for reasons that are a mystery. Raintree is a brand new building on Ang Duong St. It has very strong demand for commercial space after leasing all its retail space before the opening date. Exchange Square is still several months from operation, but it also has strong demand for both its retail and commercial spaces. In the Grade B market, Phnom Penh has a plethora of options, either buildings already operating or those about to come on to the market. The very popular Phnom Penh Tower and Canadia Tower boast very high occupancy rates, with limited vacant space. Other attractive Grade B+/options include the soon-to-open Sokea International building on Monivong, the Maybank building on Norodom, the Emerald Building, also on Norodom, or for a decent quality and cost effective solution, the brand new Vision Fund Building on Monivong in BKK1. At IPS Cambodia, our commercial agents are always adding new options to our comprehensive list of commercial options for new firms entering the market or companies looking to move from or upgrade their current offices. Whether you are in the Grade A, B or C market, or searching for that elusive perfect space that is something out of the ordinary, we would be happy to aid you in that search. Contact nigel@ips-cambodia.com to open the door to all the commercial opportunities available in the Cambodian capital.
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