Vanda Tower adds to capital’s supply of budget office space

The first tenants have begun moving into Vanda Tower, a new 11-storey office building with a distinctly yellow paint job in the capital’s central 7 Makara district that recognises the city’s demand for highly affordable Grade B office space.

The 16,000-square-metre building, which consists of 11 floors of office units and a basement parking garage with space for 50 cars, is located approximately 500 metres west of Central Market. Introductory rental rates run between $10 and $14 per square metre, making it among the least expensive Grade B office buildings in the vicinity.

Heng Piseth, manager of Vanda Tower, said the decision to develop the previously unoccupied lot into a Grade B office tower was two-fold.

“There are two reasons that we didn’t build a Grade A building,” he said. “One is because we had a limited budget, and two because there is already too much Grade A office supply in Phnom Penh.

“If we build a Grade A office building, it will be hard to lease the units because there is an oversupply in the market,” he said, adding that Vanda Tower has already signed contracts for 60 percent of its leasable space.
Grant Fitzgerald, country manager of real estate firm IPS Cambodia, said developers have shifted away from building Grade A office buildings toward the undersupplied Grade B segment of the market.

“The last few years have seen a lot of new Grade B projects come online, and with the capped demand for Grade A space, it’s only natural for developers to start looking at other segments of the market to service.”