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

CBRE notes that belief continues to be mindful amidst the existing high-interest price setting along with subsiding financial growth projections. It adds that shadow office space in the marketplace stays “quite high” and could likely increase in the 2nd 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 banking may consider giving up office in light of challenging company problems.

Knight Frank is taking an extra confident shorter-term perspective, noting that Singapore’s work market continues to be limited, with a re-employment rate of 71.7% in 1Q2023, higher than the pre-pandemic level of 65.9%, while overall unemployment stayed reduced at 1.8%.

Rents for prime workplaces in the CBD area viewed small growth in 2Q2023, based on properties traced by specialists. In a June 26 news release, CBRE notes that efficient gross leas for Quality A workplaces in the core CBD location signed up 0.4% progress q-o-q to reach $11.80 psf monthly. The company adds that openings prices for the section stayed low at 4%, underpinned by stable net absorption and no new supply.

CBRE anticipates Grade A CBD office rents to continue to be relatively flat for the remainder of the year before recovering in 2024. “With a strong trend of air travel to quality, amid a shrinking pool of high quality workplaces in the CBD, Core CBD (Grade A) rents are topped for lasting growth,” includes Track.

Knight Frank claims tenancy levels in Raffles Place also Marina Bay remained healthy, coming in at 95.8% and 94.4%, respectively, in 2Q2023, as organizations continued to seek quality areas in the CBD.

In its 2Q2023 workplace industry document, Knight Frank Research found that leas for prime grade workplaces it tracks in the Raffles Place and Marina Bay precinct climbed 1.2% q-o-q to average at $10.96 psf per month. It includes that this brought rental development to 2.5% in the very first part of 2023 in the middle of growing geopolitical stress, cost-push inflations and dominating economic gloom.

The improvement in 2Q2023 carries rental boost for Quality A core CBD offices to 0.9% for 1H2023. David McKellar, CBRE co-head of workplace services in Singapore, says the general workplace market still sees healthy interest, provided by the maritime industry, private wealth and asset management business, law firms, professional solutions, along with state agencies. The quarter additionally found renewed development in renting demand by flexible work space suppliers, that have noticed increased occupancy rates in their centres.

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


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