The term Central Business District is used to describe the area of a city featuring the largest concentration of prime commercial developments including office buildings, retail centres and hotels and a strong presence of high-profile international and local companies.
Branching out: Bangkok's mass transit systems are expanding and opening up new areas.
In Bangkok, the CBD generally refers to the area between Phloenchit/Rama I roads and the Chao Phraya River, bounded by Sathon and Witthayu roads to the east and Si Phraya/Phaya Thai roads to the west. Most of the city's Grade A office buildings, prime retail centres, five-star hotels and top-end condominiums are concentrated in this area.
The trend toward decentralisation has turned a number of areas outside Bangkok's CBD into new major business locations. This trend has been driven mainly by scarcity and higher prices of land in the CBD, which make commercial property development less possible. This has forced developers to look for new opportunities and prospective tenants to look for more affordable offices in secondary locations.
The introduction and expansion of mass-transit infrastructure across the capital is another factor that has encouraged decentralisation with improved accessibility to the central area.
As the trend toward decentralisation grows, there has been a lot of talk about the emergence of new CBDs, with a number of commercial areas in focus. Some of these have stronger potential than others.
Rama III: This area has been transformed from a largely industrial zone to a major residential location in recent years, with many condominium developments rising along the road. The opening of the BRT (bus rapid transit) system in 2010 has also given the area a boost.
Almost two decades ago, Rama III was aimed at being Bangkok's new financial hub and second CBD. However, so far, only two banks have established major facilities in the area: Bank of Ayudhya (corporate headquarters) and Bangkok Bank (back office).
In fact, the development of Rama III into a business location has been slow. At present, there are only two major office developments along the road — Supalai Grand Tower, which has 40,000m² of lettable space, and SV City Tower, an office condominium building with strata-title units offering 12,000m² of combined lettable space.
Going up: Construction continues along Rama IX Road.
Despite an attractive environment, Rama III as a commercial area remains less popular than the CBD and other prime business locations, where there are more supporting developments and infrastructure, such as the BTS and MRT systems, hotels, hospitals, shopping malls, fine restaurants, upscale entertainment and other social haunts.
Bang Na-Trat: This is another area that has been highly speculated to become a major business location. It links Bangkok with the eastern seaboard via the Bang Na Expressway (completed in 2000) and the southern section of the motorway network (completed in 2007). The opening of Suvarnabhumi airport in 2006 was a boost to the area. Bang Na-Trat is also home to a number of major retail centres that serve the fast-growing residential market and office workers in the area, as well as customers from downtown Bangkok.
As a business location, Bang Na-Trat has seen strong demand for offices from companies engaged in and related to airport operations and logistics, as well as other industries that are looking to take advantage of relatively low rents. Many of these companies are choosing to locate their back-office functions in the area.
However, low rents have discouraged new office developments in the area over the past 20 years. As a result, the office market of Bang Na-Trat is dominated by ageing buildings.
Growing office demand and limited supply in the area have allowed rents to rise recently, with a few buildings now asking for between 600 and 650 baht/m² per month, compared with the average rent of 389 baht. These rental levels have now become attractive enough to encourage new Grade A office developments. There is already one office development project under construction on Bang Na-Trat Road, Bhiraj Tower at Bitec. On completion in 2016, the 29-storey development will be the first prime-grade office building on the road.
Although Bang Na-Trat may remain way behind the existing CBD in terms of attractiveness, the pace of its development as a business area is gaining momentum and it will continue to enjoy its own unique advantages and appeal.
Ratchadaphisek-Rama IX: The area around the Ratchadaphisek-Rama IX intersection is the most talked-about emerging commercial area that has a strong potential to become an extension of the existing CBD in the future.
It accommodates a large number of old and new commercial developments, including retail centres such as Central Plaza Rama IX, Esplanade and Big C Extra; and high-profile office buildings such as Cyberworld Tower, Pakin Building, CP Tower II and three new buildings — AIA Capital Centre and The 9th Towers A and B — all of which report strong occupancy rates.
The 9th Towers A and B were developed by Grand Canal Land Plc (G-Land) as part of The Grand Rama IX, a mixed-use property development project with 1.2 million square metres of space. The project also includes The Super Tower, which is planned to be 615m tall, making it the tallest building in Southeast Asia on completion in 2019.
An increasing number of both local and international companies have located their offices in the Ratchadaphisek-Rama IX area. They are drawn by a number of positive factors, among them the increased availability of quality office supply, abundant supporting amenities, high accessibility via the MRT system, competitive office rents and a strategic location that offers easy access to the CBD and the link between Bangkok's northern and eastern corridors.
As the mass rapid transit systems are expanding and the trend toward decentralisation continues to grow, there will be more locations that emerge as new business areas. After all, only time can tell whether or not all those areas could become a new CBD. But one thing is certain: the success of any business location relies a lot on the number of its attractive offerings — and those offerings take time to develop.
Suphin Mechuchep is the managing director of Jones Lang LaSalle (Thailand) Ltd. For real estate advice, readers can contact JLL by phone: 02-624-6400 or email: info.thailand@ap.jll.com. For more insights, visit www.joneslanglasalle.co.th.
