CBD Grade A Office Take-up Surge By Over 8-fold Last Year
SINGAPORE – Data from Cushman & Wakefield (C&W) shows that demand for Grade A office space located in the city-state’s central business district (CBD) rose sharply by more than 8 times to 0.8 million sq ft for the whole of 2021 as compared to the prior year, reported the Singapore Business Review on Wednesday morning (12 January, SGT).
On a quarterly basis, CBD Grade A office rents edged up 1.7 percent in Q4 2021. Annually, office rents rose by 2.3 percent to S$9.81 psf per month, with the Marina Bay submarket leading with 4.9 percent year-on-year growth.
According to the property consultancy, one of the major demand drivers for office space during the fourth quarter of 2021 is the preference by tech firms and financial institutions for quality office space.
In fact, both sectors collectively accounted for at least 72 percent of the new office leases in Singapore’s CBD for the entirety of 2021.
“Technology and financial sectors continue to fuel office demand. Singapore’s attractiveness as a tech and financial hub and strong growth prospects of Asia’s digital economy. These sectors are expected to continue to increase headcount and drive expansion in 2022,” noted C&W’s Executive Director and Head of Singapore Commercial Leasing, Mark Lampard.
Looking forward, Cushman & Wakefield expects other industries to contribute to office demand, so long as business conditions and Singapore’s economy rebounds in 2022. Office demand in the CBD could potentially increase by an additional 4.6 percent, which could help support office rents in the area.
“Office demand could also pick up from other sectors which have been battered by the pandemic, as business conditions improve in 2022 amidst a sustained economic recovery and continued increase of business activities,” noted Wong Xian Yang, Research Head for Singapore at C&W.
“Overall, resurgent office demand and tight supply are expected to propel CBD Grade A office rents by 4.6 percent in 2022 alongside expected tightening vacancy rates.”