Commercial space demand still low

Highlights

●    Around 70% of commercial spaces, which became vacant during pandemic, have yet to be rented
●    Around 100-150 business people left their shops, each month, between June and September in Dhaka                                                                                      
●    Tenants are moving to cheaper places
●    Owners are not finding tenants even after reducing rent
●    In Gulshan and Banani, the rent is now Tk70-100 per sq ft, which was Tk100-150 before the pandemic
●    Still space-for-rent advertisement ratio is 50% higher than before Covid-19

At least four floors of Bilkis Concord Tower in the capital's Gulshan 2 went vacant during the Covid-19 pandemic and the owner of the commercial building has not found any tenants as yet.

Many commercial buildings in Dhaka city are now facing a similar crisis.

In Gulshan, at least three floors – 5,000 square feet in size – in Zahed Plaza have remained empty for more than two months, said Md Jasim, security officer of the building.

The same situation is seen in the Richmond Concord Tower and Akash Group building in Gulshan; Ahmed Tower and a few other buildings in Banani; the Dhaka Trade Center, TK Bhaban and CA Bhaban in Karwan Bazar – where at least two or more spaces have been empty for several months.

Even the most-in-demand commercial spaces in Motijheel are facing the same crisis.

Many such spaces in the area are vacant while many advertisements for commercial space rent are posted.

"During the Covid-19 crisis, many firm owners were forced to leave their large offices because of reduced incomes. They are now managing offices in smaller spaces in order to reduce the rent. Even some business firms have had to shut down their businesses," said NKA Mobin, senior vice-president, Dhaka Chamber of Commerce and Industry.

In most cases, tenants are unable to pay the rent, he said.

Big companies faced a minor crisis as they either had the government's support or had spaces of their own, he continued, but small and medium businesses were the worst-hit.

A few businessmen had to rent smaller spaces for their offices to keep the ball rolling while some others had to close their businesses, Mobin said.

Most of the building owners offered discounts to keep the tenants, but many saw their tenants go, the DCCI leader added.

Different organisations have shifted to small offices to cut maintenance costs.

An NGO named Network on Climate Change in Bangladesh is shifting to a smaller office, from Shyamoli to Mirpur DOHS in order to reduce its rent expenses, said Abu Obayed, administrative manager of the NGO.

The rent of the organisation's current office at Shyamoli is Tk55,000 while it is Tk33,000 for the new office in Mirpur DOHS.

The situation is not like this only in the private sector.

In Karwan Bazar, two floors – 4,000 square feet each – of the Bangladesh Fisheries Development Corporation building have remained empty since January this year.

In February, a company made an agreement with BFDC to rent the floors from April.

But in mid-march, the company cancelled the agreement, saying its business was not running well, said an official of the corporation, wishing not to be named.

"No other tenant has come in the meantime, and the floors have remained empty," he added.

"Although we are advertising in different media regularly, no response has come as yet," he said adding that they even wanted to decrease the rent by Tk15 per square foot.

Similarly, one floor in the Bangladesh Steel and Engineering Corporation building in Karwan Bazar has been vacant for about six months, which is unusual for the building.

Photo: Salahuddin Ahmed

The corporation has also decreased the rent but has had no response as yet.

Md Ismail Hossain, property officer of the corporation, said apart from advertising in several media outlets, they are distributing leaflets to attract tenants. But people rarely come.

"When someone comes, they want no more than a 1,000 square feet space. But each of our floors is 6,000 square feet and there is no way to split the floors in several parts," he said.

Md Rayhan Shamim, managing partner of the Asset Care service, said, "We deal with the rent and sale of commercial spaces in Gulshan, Banani, Uttara, Dhanmondi and some other areas in the capital. Still 70% of the commercial spaces do not have tenants. They [building owners] have lost their tenants amid the pandemic.

"In Gulshan and Banani, the rent per square foot is Tk70-100 on the ground floor now. But it was Tk100-150 before the pandemic. The rent for the spaces upstairs is even lower."

Meanwhile, several property management firms told The Business Standard that the ratio of commercial space rent advertisements had increased significantly on their sites compared to what they were before the novel coronavirus effect.

Mohammad Eusuf, manager of Bdhousing.com, a property management website, said, "The number of commercial space rent advertisements shot up by around 64% on our site between February and June this year. Although the advertisements have been decreasing since July, the ratio is 50% higher than before [the novel] coronavirus." 

"On our site, the number of the advertisements: in February was 294, in March 310, in April 518, in May 933, in June 814, in July 753, in August 677, in September 451, and in October 423," he added.

Property Agent Rayhan Shamim said Gulshan and Banani were the worst affected commercial zones amid the pandemic. 

Still so many flats are empty, especially the newly-constructed ready commercial flats, he added.

Another agent Tuhin Babu said, "The demand has gone down to such an extent that landlords are not finding tenants even after decreasing rents in most of the areas in Dhaka."

Mentioning the sorry state of all businesses, Helal Uddin, president of Bangladesh Shop Owners Association, told The Business Standard, "Around 100-150 businessmen closed their businesses permanently and left their shops, per month, on average, from June to September in Dhaka."

"We had given a rent waiver facility for the months of April and May. We had taken 50% of the rent from June to August. Most of the shop owners implemented the decisions of our association," he added.  

DCCI Vice-President Mobin said, "The demand for commercial space might not return to its previous state even after the pandemic is over. This is because companies or business firms are growing accustomed to operating their offices from home as well as in smaller spaces."