Vietnam office landlords race to upgrade ageing stock

More than half of Vietnam's office buildings need upgrades to protect and increase their value, according to JLL. Older assets face growing pressure from occupiers' environmental and workplace demands.

The assessment focuses on office stock in Ho Chi Minh City and Hanoi, where total supply is about 4.1 million square metres. Grade A buildings make up roughly a third of that total, and about 65% of Grade A space has already secured international green certification.

That divide is sharpening competition between newer buildings designed around environmental targets and older assets built 10 to 20 years ago. Many of those older buildings still benefit from strong locations and established tenant bases, but they often lag in mechanical, electrical and plumbing systems, energy use, indoor air quality, and amenities tied to health and user experience.

JLL's global research points to a broader risk for landlords that delay investment: about 65% of current office buildings worldwide could become obsolete by 2030 if they are not upgraded.

Market shift

For years, Vietnam's office sector was shaped mainly by location and rental levels. Now occupiers are placing greater weight on energy efficiency, workplace quality, Net Zero alignment and employee experience. That is changing how landlords position existing stock, especially in central districts where replacement supply is limited and older buildings still offer transport links and established occupier communities.

Advisers are not arguing that all ageing buildings should be replaced. Instead, the market is shifting towards refurbishment and repositioning, as owners try to preserve the location advantages of older properties while improving environmental performance and the day-to-day tenant experience.

JLL estimates investment in these projects at 1% to 7% of total asset value. The work often focuses on areas with the clearest impact on energy use and occupier standards, including high-efficiency HVAC systems, LED lighting, smart building management tools, air quality measures, water-saving systems and health-focused amenities.

According to the firm, those outlays can protect income streams while lowering operating costs over time. Buildings with green certification and clear emissions reduction plans are achieving rents 15% to 30% above comparable assets.

Landlord response

Several upgraded towers in Ho Chi Minh City have become examples of that approach. JLL cited Me Linh Point Tower, mPlaza and Vincom Centre Tower as buildings that have seen a favourable market response after refurbishment, reflecting stronger tenant interest in building quality and environmental standards.

Demand is being driven in part by multinational occupiers and sectors with formal carbon targets. Technology, finance, pharmaceutical and professional services companies are among those prioritising offices with green certification, energy consumption tracking and support for Net Zero goals.

That demand is closely tied to corporate decarbonisation commitments, particularly as companies face pressure to address Scope 3 emissions across supply chains and leased property footprints. For occupiers, property selection is becoming part of reporting and compliance rather than a real estate decision based only on rent and location.

Stephanie Dinh, Director of Project & Development Services at JLL Vietnam, said those pressures are changing owner attitudes towards refurbishment. "ESG is creating new standards for the office market. In the past, many owners viewed building upgrades as costs requiring consideration but today, we observe a completely different picture. Buildings that proactively invest in energy efficiency, user health and operational technology are better able to attract tenants, maintain rental rates and protect asset value in the long term. For many existing buildings in Ho Chi Minh City, this is an opportunity to reposition assets and create new competitive advantages," Dinh said.

Shared incentives

The shift is also changing the balance between landlords and occupiers, as both sides look for lower operating costs and stronger environmental performance from office space. Landlords are trying to defend occupancy and rents, while tenants want buildings that support internal climate goals and provide a healthier workplace.

Dinh said that dynamic is creating a more aligned relationship between both sides of the market. "Previously, landlords maximized profits while tenants optimized costs. Today, ESG creates opportunities for both parties to achieve their goals. Landlords benefit from higher occupancy rates, better rental rates and preserved value. Tenants benefit from lower operating costs, better quality environments and carbon neutrality commitment fulfillment. This is a true win-win scenario," Dinh said.

The figures suggest the challenge is significant, with most of Vietnam's office stock outside the newest green-certified segment. For owners of ageing properties in core business districts, the choice is increasingly whether to invest in upgrades or risk losing competitiveness as occupiers tighten their building requirements.