The Return of Rental Space Joy?

The rental space market has been witnessing a resurgence lately, sparking hope for economic recovery. As we stroll along the bustling streets of downtown and the outskirts of Ho Chi Minh City, we notice a decline in the number of rental signs. Streets such as Hai Ba Trung, Ly Tu Trong, and Le Thanh Ton now have fewer “For Rent” boards compared to before. However, there are still many vacant spaces lingering in the city center, mostly large-sized and high-priced rentals.

In contrast, the outskirts, such as District 9 and District 2, have seen shophouses quickly filling up, with no signs of vacancies like we observed in mid-2023.

This photo shows a row of shophouses in District 9, taken in June 2023. Photo: HV

This photo shows the same shophouses in District 9, taken in March 2024. Photo: HV

Most businesses have already occupied these shophouses since late 2023 and early 2024. However, there are still some vacant spaces available. Photo: HV

In District 7, the number of vacant spaces has also significantly decreased compared to mid-2023. Photo: HV

Apart from the rental spaces on these streets, retail spaces in shopping centers have also shown clear signs of recovery. According to recent statistics, more than 30 new brands, including renowned international brands like UNIQLO, H&M, Hublot, MiniSo, Cotti Coffee, Runway, and Shuyi, have opened or expanded their businesses in Vietnam in 2023. This surge in demand has created a favorable environment for retail spaces in Ho Chi Minh City.

Cushman & Wakefield’s latest report on retail spaces reveals that in the last quarter of 2023, the occupancy rate in shopping centers reached nearly 90%, an increase of 0.2 percentage points compared to the previous quarter and 1.9 percentage points compared to the same period last year. Moreover, rental prices have not only remained stable but also increased by 2.1% quarterly and 7.6% annually, with an average of $53.1 per square meter per month. The price hike is mainly attributed to the opening of two new projects in Ho Chi Minh City, Hung Vuong Plaza (District 5) and Thiso Mall Truong Chinh – Phan Huy Ich (Go Vap District).

According to Cushman & Wakefield, the supply of commercial spaces in Ho Chi Minh City is expected to continue increasing in the 2024-2026 period. There are already plans to renovate and expand over four shopping centers both within and outside the city center, with a total area of 112,000 square meters in 2024 and 97,400 square meters in 2025.

While there are signs of a decrease in the rental frequency of spaces in the city center, there are still a considerable number of vacant spaces, indicating the ongoing economic challenges. Photo: HV

Troy Griffiths, Deputy Managing Director of Savills Vietnam, believes that the retail market in Ho Chi Minh City and the domestic economy, in general, are thriving, especially in the F&B and entertainment sectors. Savills’ observations show that modern retail markets such as supermarkets, shopping centers, and online platforms are performing exceptionally well, with strong rental rates and high occupancy rates.

However, traditional retail stores or markets are facing increasing difficulties due to the emergence of newer retail models. As a result, traditional retail stores will continue to be replaced by more modern and appealing concepts to attract consumers. This compels property owners to participate in asset development or repositioning to attract both tenants and consumers.

With the rental space market showing signs of revival, it is an encouraging sign for the local economy. As new businesses continue to open and expand, the demand for rental spaces is expected to rise steadily in the coming years.