Prime Office Rents In Raffles Place, Marina Bay Up 1.7% In Q4
SINGAPORE – Average office rents of prime grade office space in Raffles Place / Marina Bay rose by 1.7 percent quarter-on-quarter to S$10.69 psf per month during the fourth quarter of last year, according to a report published by Knight Frank on Monday afternoon (16 January, SGT).
This pushed up the submarket’s overall rental growth for the whole of 2022 to 5.5 percent, which is slightly higher than the 3 percent to 5 percent forecast made by the real estate consultancy at the beginning of last year.
“Due to the tight supply of new office inventory coupled with steady demand for traditional as well as co-working space, the office sector has become a landlord’s market,” Knight Frank stated in its report.
Moreover, the property consultancy revealed that the office occupancy rate in the Raffles Place / Marina Bay submarket remained strong at 95.5 percent. This surpassed the overall office occupancy of Singapore central business district (CBD), which rose from 93.6 percent in Q3 to 94.2 percent during the fourth quarter.
“Many businesses actively sought quality office space that can support the full resumption of functions to pre-pandemic levels, and meet the operational needs of a normalising economy,” Knight Frank said.
Meanwhile, the real estate consultancy noted that the long-term adoption of hybrid work arrangement in Singapore may not be as pervasive and permanent as initially thought during the height of the coronavirus outbreak.
It has been observed that the percentage of employees working remotely is likely to fall from an expected earlier average of 20 percent to between 10 percent and 15 percent, depending on the nature of the business and work functions.
In addition, a LinkedIn study showed that 51 percent of surveyed company leaders prefer their staff to work more frequently in the office. Also, remote working roles are shrinking as productivity goals become an increasingly crucial priority amid a slowing economy.
As such, Singapore’s office sector remains active with would-be tenants continuing to seek better quality workspace. For instance, the recently completed Hub Synergy Point secured its first tenant: global chemical and speciality material group Celanese, which agreed to lease 7,300 sq ft of office space.
“There are also more office use innovations in Singapore’s central business district (CBD) with the steadily increasing popularity and range of flexibility offered by coworking spaces. Trehaus at Funan, a coworking space operator, incorporates childcare and pre-school services. Another coworking ecosystem approach is by One&Co at Twenty Anson, a Japanese coworking hub and innovation platform that supports Japanese companies expanding into Singapore,” Knight Frank shared.
Furthermore, the property consultancy revealed that tenants continue to relocate from ageing office properties as well as buildings poised to be redeveloped, like the Clifford Centre.
“As more businesses prioritise reducing carbon footprints, quality office buildings with the highest sustainability certifications will become increasingly sought-after,” it added.