Hanoi’s Grade A office market reached 652,000 square meters of net leasable area in the second quarter, boosted by the opening of the new IFC Hanoi complex in the West Westlake cluster.
New supply lifts vacancy, but demand stays positive
The 60,000-square-meter IFC Hanoi pushed total Grade A stock to its highest level yet, according to real-estate consultancy JLL. The project, targeting LEED Gold certification, added premium office space outside the central business district and contributed to a temporary rise in overall vacancy.
Citywide vacancy jumped to 26.2% in the quarter, up 7 percentage points from 19.2% in January. JLL attributed the increase to the market absorbing the new supply rather than a drop in demand.
Net absorption remained positive in the first half of 2026, totaling 3,200 square meters. The second quarter alone saw 2,600 square meters of net absorption, driven by tenants moving into newly completed buildings in non-CBD locations.
CBD struggles while non-CBD rents climb
The central business district continued to face challenges. Cyclical lease expirations led to tenant departures, but JLL noted that most existing CBD buildings held net effective rents steady at $32.7 per square meter per month to stay competitive.
Outside the CBD, rents rose 2.4% quarter-on-quarter to $24.1 per square meter. The increase was partly due to new buildings entering the market at higher-than-average rates, reflecting the appeal of modern, amenity-rich spaces in emerging clusters like West Westlake.
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This divergence between CBD and non-CBD markets isn’t new, but the scale of upcoming supply in West Westlake could accelerate the shift. Older buildings across the city may soon face more pressure to upgrade or adjust leasing strategies to keep tenants.
It’s a familiar pattern in fast-growing Asian cities—decentralization often starts with a few high-profile projects before spreading to secondary locations. What’s different in Hanoi is the speed at which non-CBD clusters are maturing, with multiple large-scale developments already in the pipeline.
Five-year pipeline set to reshape market
JLL expects the West Westlake cluster to dominate Hanoi’s office supply over the next five years. The concentration of new projects there will give tenants more options for modern, well-equipped spaces outside the traditional CBD.
For landlords, the message is clear: older buildings will need upgrades or more flexible leasing terms to compete. The consultancy predicts that some may struggle to fill space unless they adapt to changing tenant preferences.
The next 12 to 18 months will be critical. If absorption keeps pace with new supply, vacancy could stabilize. If not, the market may see further downward pressure on rents, particularly in older buildings that lack modern amenities or sustainable certifications.
