Minimal absorption amid holiday slowdown

• In Q1 2026, Grade A net absorption was modest at 620 sqm, a result of subdued leasing activity during the holiday period and limited initial take-up at newly delivered projects.
• Grade B net absorption reached 1,625 sqm, driven by new leasing at recently completed projects, which offset tenant departures from older stock. Overall, escalating headwinds have prompted most tenants to adopt a cautious approach to office planning.

Influx of new supply pushes vacancy higher temporarily

• The quarter welcomed two notable completions totalling over 36,000 sqm of NLA, both incorporating sustainability credentials: the LEED Gold–certified The Office (Grade A) at the Tien Bo Plaza complex and LEED Silver–certified The Marc88 (Grade B).
• The influx of new supply pushed market-wide Grade A vacancy rate to 19.2% in Q1 2026 from 16.5% in the previous quarter, while the Grade B vacancy rate rose to 17.0% from 13.8% in Q4 2025, driven by initial vacancy at newly completed projects.

Measured rental growth supported by new supply

• In Q1 2026, Grade A gross asking rents edged up slightly to USD 37.1 per sqm per month (+0.9% q‑o‑q), while Grade B rents increased to USD 20.6 per sqm per month (+0.4% q‑o‑q), driven by new supply entering the market at above‑average pricing.
• Meanwhile, most existing office buildings proactively maintained stable rents to attract and retain tenants amid rising competition from incoming supply.

Outlook: West Lake emerges as new office hub with pipeline poised to reshape market dynamics

• West Westlake area is emerging as a new office precinct with robust future supply from integrated mixed-use developments designed to international standards. These projects are poised to set new market benchmarks, led by IFC Hanoi’s nearly 60,000 sqm delivery in Q2 2026.
• West Westlake’s substantial next five-year supply pipeline is expected to fundamentally reshape Hanoi’s office market dynamics. Tenants will gain expanded options in modern, amenity-rich buildings, while older stock faces heightened competitive pressure.