Of the 42,300 square meters of new office space supply, 55 percent was in Go Vap District and Thu Duc City.

Savills analysts say the relocation of office spaces to the outer districts was bound to happen, given the limited area for real estate development and high costs in the city center. Other motivating factors for the shift are improved transportation systems in the outer districts and more city dwellers moving to outskirt areas.

Tu Thi Hong An, Head of Commercial Leasing of Savills Vietnam, said that office buildings in the outer districts are attractive to tenants because the rents are cheaper and more affordable while offering the same building quality as those located in the city center.

She said there has also a change in the structure of tenants. Typically, offices in the central areas were prioritized by companies in the real estate, finance, banking and education sectors in pre-pandemic times because they needed easy access to their customers and other businesses.

However, amidst the pandemic, many tenants prefer office spaces in the outer districts with lower rents because many companies have shifted their businesses to digital platforms.

The total office space in HCMC was about 2.4 million square meters in the first quarter, up 11 percent year-on-year, Savills reported. The average office rent was $31 per square meter per month, down 3 percent from the same period last year.