Tech firms’ rapid growth amid pandemic pushes up demand for office space

Technology, game development and e-commerce companies are scouring HCMC for office space as their requirements expand in step with surging growth.

Vietnam, HCM, office, real estate

Office buildings in Ho Chi Minh City. Photo by VnExpress/Quynh Tran.

A survey by VnExpress found a property technology company has rent a 1,700-square-meter office building in District 11 with spaces for amusement and rest for employees working 24/7.

In an area close to Tan Son Nhat International Airport, offices with 300-500 square meters of space are leased by web development companies and property technology companies, most of them start-ups seeking shared office space.

The number of tech companies renting offices in HCMC rose by 30 percent in the first quarter, according to data from VNO Development and Investment Corporation, a company that converts residential buildings into offices for rent.

A game and entertainment app development company has rented an office from the company with over 3,000 sq.m of space, and plans to expand it further. A tech company each from India and Thailand have rented offices with over 1,000 sq.m to expand their business.

VNO chairman Nguyen Hong Hai said the pandemic has changed the structure of the office lease market, skewing it away from traditional businesses and toward the technology sector.

Tech companies require reliable Internet and electricity connection, and, since their employees usually work 24/7, need large offices that combine working and relaxation-amusement spaces, he said.

Han Nguyen, head of office services at real estate firm Colliers International Vietnam, said the pandemic has created an environment for technology companies to flourish, and so their demand for office space is surging.

Colliers said demand for human resources in the sector is rising, especially for highly skilled employees, to improve competitiveness, and even new companies are offering good terms to attract skilled candidates.

Some firms are planning to recruit up to 1,000 engineers this year and many plan to employ 10-20 employees each month, and this has resulted in the rising demand for offices, Han explained.

Location and infrastructure are factors technology companies consider when renting an office, she said.

Many prefer offices in the city center, mostly grade B office buildings with an average monthly rental of $25-35 per square meter.

Speaking to VnExpress, Trang Minh Ha, a management consultant, said tech firms’ demand for office space would continue to rise over the next one or two years as businesses in e-commerce, financial technology, ride hailing, and online food order and delivery thrive amid the pandemic and social distancing.

Their offices need to be large since their average growth rate is 30-100 percent a year, he said.

He quoted management consultancy McKinsey & Company as saying the growth of technology companies would only slow down in 2022 when the pandemic is fully under control.

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