Villas versus Office Space

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All Phnom Penh residents are familiar with BKK1, the Sangkat (suburb) once known for its NGO offices and large villas, now becoming famous for its coffee shops and condos.

As a direct result of this transformation, Villas in BKK1 are becoming harder and harder to find, and while most organizations still want to keep their roots in Phnom Penh’s most sought after location, landlords and prices are forcing things to change quickly.

As long-term leases expire and landlords can smell the reward of selling to developers, villa and land prices in BKK1 have moved out of reach of NGOs and most corporate clients.

The result has been a strong shift towards professional office space in newer buildings. The office space that villas provide is not the most efficient and organizations are able to reduce their requirements, in overall square meter terms, as they move to tailored solutions in office buildings.

For example, an organization that used to have 400 square meters of villa space may find that, with an efficient design, they can comfortably move into 250 square meters of open plan office space.

Price also plays a very important part in this process. The villa that rented for $2,000 for 400 square metres equates to $5 per sqm. The only office space available around this price is for the lease of complete buildings on the outskirts of Phnom Penh.

However, as the organization no longer needs the full 400sqm it can take advantage of an efficient office design and get a lot more out of a smaller area.

There are other advantages to moving from villas into an office building. Villas, historically have little or no fire and safety standards, whereas, new office buildings will most likely include some type of fire standards. Security guards also tend to be included in service charges of new buildings so there is no longer a need for the organization to provide their own 24-hours security.

At the end of the day, a purpose-designed office creates a far more efficient operation. By the time the size is reduced to the actual space required and the security cost is subtracted, the net result is a much smaller increase in overall spend on rental costs.

The transition from a villa to office building is becoming the norm rather than the exception for Phnom Penh’s business and NGO community.


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