Office Occupancy May Improve As COVID-19 Vaccine Becomes Available Soon
SINGAPORE – While office occupancy rate in the city-state’s central business district (CBD) slightly declined during the third quarter, it may recover as office workers become assured of their safe return to their workplace as an effective vaccine potentially becomes available over the next few months.
On Wednesday morning (2 December, SGT), The Straits Times reported that American biotech firm Moderna is already communicating with the Singapore government for the approval of the use of its COVID-19 vaccine in the republic.
Moderna’s CEO Stephane Bancel informed the news agency on Tuesday night that they are already in talks with Singapore’s Health Sciences Authority (HSA).
“We’ve started sending to Singapore all the (vaccine) information that we have, and we’re having a very good dialogue with them.”
“It is of course their decision how long they need to be comfortable with the data, because their (top priority) is to ensure the safety (of the vaccine), but I anticipate that it (i.e. first batch of vaccines) could be (delivered) maybe in December, maybe in January.”
Meanwhile, recent data from Savills showed that the occupancy rate of Grade A offices in Singapore’s CBD slid from 94.3 percent in Q2 to 93 percent during the third quarter, reported The Edge on Tuesday afternoon (1 December, SGT).
The dip in occupancy level could be partly due to lessees surrendering shadow office space during their lease renewals, or terminating their leases earlier as they cease operations.
Savills Singapore’s Executive Director for research and consultancy, Alan Cheong, noted that while the government has allowed 50 percent of a firm’s workforce to return to their workplace for certain industries with CBD office space, a large number of office premises there only saw a return of 30 percent of workers.
Moreover, the staff who have returned to their workplace are performing their roles at different sites. Although this has resulted in a higher demand for regional office premises, there’s limited stock of such properties due to construction delays caused by the pandemic. Cheong believes that the limited office inventory will hold up office rents over the near-term.
Savills also revealed that office lessors here have become more amenable in recent weeks to short-term lease renewals of 2 years, instead of the usual 3 to 5 years. While office rents in the republic have not yet posted hefty drops, the consultancy forecasted that Grade A CBD office rents would reach a lower baseline and vacancy levels would rise as well.
Furthermore, Savills noted that many multinational corporations (MNC) with a presence in Singapore but are headquartered in the northern hemisphere are delaying their property plans until next spring. As such, office space requirements as well as target employee headcount for 2021 and 2022 are not yet certain.