Singapore office rents fall in 3Q2023 on weaker demand: JLL
JLL’s research study shows that gross effective lease for Grade An office in the CBD dropped 0.3% q-o-q to approximately $11.29 psf monthly in 3Q2023, down from $11.32 psf monthly in 2Q2023.
The decrease comes from ongoing economic pressures, states Andrew Tangye, head of workplace leasing as well as advisory for JLL Singapore. “The unclear near-term forecast originating from a mix of slowing down financial growth, geopolitical stress and increasing prices have continued to maintain occupants cautious plus cost-conscious, leading to weak office space take-up,” he adds.
Tay Huey Ying, JLL Singapore’s head of research study and consultancy, concords, putting in that office rental improvement came to be a lot more widespread this previous quarter. “Our evaluation reveals that greater than 15 investments commanded lesser hires in 3Q2023 than in 2Q2023, which dragged down the average rents for CBD Level An area for the very first time ever since they turned around in 2Q2021.”
Singapore office space leas declined in 3Q2023, according to data documented by JLL in a Sept 25 announcement. The consultancy adds in that it observes the very first quarterly downtrend adhering to 9 consecutive quarters of office rental development in the city-state.
Beyond the temporary headwinds, the medium-term outlook for Singapore’s Level A CBD office leasing market continues to be rich, JLL opines. Need will be upheld by Singapore’s burgeoning reputation as a worldwide hub, while the supply of office space in the CBD will continue to be constricted by a lack of greenfield sites together with URA’s emphasis on adding even more live and play spots downtown.
Three workplace ventures are scheduled for finalization in the CBD over the next 24 months– IOI Central Boulevard Towers (1.3 million sq ft) along with Keppel South Central (0.6 million sq ft) in 2024, and also the redeveloped Shaw Tower (0.4 million sq ft) in early 2025. JLL states that to date, over 1.5 million sq ft is approximated to be still uncommitted.
He attributes the lower leas to more supply from workplace stock being gone back to the marketplace “at an escalating pace” as even more tenants right-size upon lease renewal to take care of prices.
She expects downward force on office rents to escalate, with hires correcting further in the coming months amidst the existing macroeconomic environment as well as incoming workplace supply. “Against the backdrop of an increase of future undertakings competing for a small pool of lessees, the temporary overrun of office might end up being more noticable,” she adds.