Singapore Office Market Sees 3rd Straight Quarter Of Solid Net Absorption
SINGAPORE – The positive momentum in the city-state’s office market at the end of 2021 extended during the first quarter of the year, as net office absorption hit 307,282 sq ft, marking the 3rd straight quarter of positive net demand, according to a recent report from CBRE.
The real estate consultancy also noted that the average office vacancy level here continued to decline to 5.8 percent in Q1 2022 from 6.3 percent during the previous quarter, as there were zero completions in the period under review.
In particular, the vacancy rate of office space in Singapore’s central business district (CBD) stabilized at 4.5 percent, while monthly rents of such commercial properties edged up by 1.4 percent to S$10.95 psf.
CBRE thinks that the city-state’s office market is slated to benefit from increasing demand as workplace restrictions here were further eased. Consequently, it expects core CBD Grade A office rents to rise by 6.9 percent on an annual basis in 2022, with rental growth forecasted to gain momentum over the next few quarters. This growth in office space demand would be driven by the coworking segment, as well as tech firms and non-bank financial sectors, amidst limited new office stock.
Over at the business park sector, the property consultancy noted that tenant demand generally improved across all submarkets, with the overall market recording a positive net absorption of 186,982 sq ft in Q1 2022, recovering from the negative take-up in the prior quarter.
While the vacancy level for business parks in Singapore’s outskirts fell for the 3rd straight quarter to 4.7 percent, that for the rest of the submarket inched up 0.9 percentage points on a quarterly basis to 18.1 percent due to higher vacancies in newly completed buildings.
In light of the more solid demand and limited availability in the city fringe, monthly rents of business parks climbed for the 4th consecutive quarter by 0.8 percent quarter-on-quarter to S$5.95 psf.
For the rest of the island, business park rents were unchanged at S$3.65 psf per month, widening the gap between the two submarkets further.
CBRE expects the prospects for Singapore business parks market to face less uncertainty in the next few quarters, giving some respite for the rest of the island submarket.