Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient

Knight Frank is getting a more confident shorter-term perspective, noting that Singapore’s labour market remains tight, with a re-employment rate of 71.7% in 1Q2023, more than the pre-pandemic level of 65.9%, while total unemployment remained reduced at 1.8%.

In its 2Q2023 office industry record, Knight Frank Research discovered that rents for prime grade workplaces it monitor in the Raffles Place and Marina Bay district climbed 1.2% q-o-q to standard at $10.96 psf monthly. It includes that this brought rental development to 2.5% in the initial half of 2023 amidst growing geopolitical tensions, cost-push inflations and also prevailing economic gloom.

The development in 2Q2023 takes rental rise for Grade A core CBD workplaces to 0.9% for 1H2023. David McKellar, CBRE co-head of office solutions in Singapore, claims the overall workplace market still sees well-balanced demand, provided by the maritime market, exclusive wealth and asset management firms, law firms, professional services, along with government firms. The quarter additionally found restored growth in renting need by flexible work space suppliers, who have seen boosted tenancy prices in their centres.

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CBRE notes that view continues to be careful amidst the existing high-interest rate setting along with easing financial development projections. It adds that shadow workplace in the marketplace stays “fairly high” and could possibly raise in the second half of the year. CBRE’s head of research for Singapore and Southeast Asia, Tricia Song, claims that occupiers in technology, cryptocurrency along with consumer financial might consider giving up office space in light of difficult company problems.

Knight Frank claims tenancy degrees in Raffles Place also Marina Bay continued to be healthy, coming out at 95.8% and even 94.4%, respectively, in 2Q2023, as organizations remained to look for quality spaces in the CBD.

CBRE anticipates Quality A CBD workplace leas to continue to be reasonably flat for the remainder of the year prior to recovering in 2024. “With a solid pattern of flight to premium, amid a reducing pool of top quality offices in the CBD, Core CBD (Grade A) leas are keyed for lasting development,” adds Song.

With strict inventory in the CBD and also tenancy levels supported by flight-to-safety plus flight-to-quality patterns, Knight Frank predicts potentially higher rental fees than formerly predicted. It predicts prime office leas to expand in between 3% and 5% this year, an enhancement from the estimated 3% growth projection made at the end of 2022.

Rents for prime offices in the CBD area viewed minimal growth in 2Q2023, based upon properties traced by consultants. In a June 26 press release, CBRE notes that efficient gross rental fees for Grade A business offices in the center CBD location registered 0.4% growth q-o-q to get to $11.80 psf monthly. The company adds that openings rates for the segment remained affordable at 4%, underpinned by stable net absorption and no brand-new source.


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