Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient
Knight Frank is taking a much more positive shorter-term perspective, mentioning that Singapore’s labour market stays tight, with a re-employment rate of 71.7% in 1Q2023, higher than the pre-pandemic degree of 65.9%, while overall joblessness remained low at 1.8%.
In its 2Q2023 workplace sector document, Knight Frank Research identified that rents for prime grade offices it tracks in the Raffles Place and Marina Bay district rose 1.2% q-o-q to standard at $10.96 psf monthly. It adds that this carried rental development to 2.5% in the very first part of 2023 amid rising geopolitical tensions, cost-push inflations and also dominating financial gloom.
Knight Frank claims tenancy degrees in Raffles Place also Marina Bay stayed healthy, coming out at 95.8% and even 94.4%, respectively, in 2Q2023, as companies remained to seek high quality places in the CBD.
CBRE expects Quality A CBD workplace rental fees to continue to be relatively fixed for the remainder of the year before recouping in 2024. “With a solid trend of air travel to quality, amidst a reducing pool of high quality workplaces in the CBD, Core CBD (Grade A) rental fees are primed for long-term growth,” adds Song.
Rents for prime workplaces in the CBD neighborhood observed marginal development in 2Q2023, based on real estates traced by specialists. In a June 26 announcement, CBRE notes that reliable gross leas for Quality A business offices in the center CBD place registered 0.4% development q-o-q to get to $11.80 psf per month. The firm includes that openings rates for the section continued to be affordable at 4%, underpinned by stable net absorption and no brand-new supply.
CBRE notes that belief stays careful amidst the current high-interest rate atmosphere and slowing financial development projections. It adds that shadow office space in the marketplace continues to be “quite high” and might possibly raise in the second part of the year. CBRE’s head of research for Singapore and Southeast Asia, Tricia Song, states that tenants in technology, cryptocurrency and even consumer financial might look into giving up office because of difficult business problems.
The improvement in 2Q2023 brings rentals rise for Quality A core CBD workplaces to 0.9% for 1H2023. David McKellar, CBRE co-head of workplace services in Singapore, says the overall office space market still sees well-balanced demand, added by the maritime sector, private wealth and even property administration companies, law practice, professional services, and government agencies. The quarter also saw restored development in leasing demand by versatile workspace providers, that have seen increased tenancy prices in their centres.
With strict inventory in the CBD and tenancy levels sustained by flight-to-safety and flight-to-quality trends, Knight Frank predicts potentially higher rents than previously forecasted. It predicts prime workplace rents to grow in between 3% and also 5% this year, an improvement from the approximated 3% growth projection made by the end of 2022.