Singapore Office Rents Hit Trough In Q3

SINGAPORE – Office rents here appear poised to hit rock-bottom during the third quarter, according to the latest report from Knight Frank that was published on Tuesday (29 September).

According to the real estate consultancy’s “Singapore Office Market Update – Q3 2021”, monthly rents of prime office space in the Raffles Place / Marina Bay precinct rose for the first time since Q4 2019, with rents edging up by 0.2 percent quarter-on-quarter to S$9.98 psf.

“Office rents turned a corner and bottomed out in Q3 2021 as occupancy rates for prime offices in the precinct remained relatively stable, falling marginally by 0.7 percentage points quarter-on-quarter to 93.6 percent, a slight reversal from the 0.1 percentage point growth recorded in Q2 2021,” said Knight Frank, adding that office occupancy levels in Singapore’s central business district (CBD) reached 93.1 percent.

Another positive sign is that the volume of available pre-terminated office space declined 78.9 percent on a quarterly basis to around 76,000 sq ft during the third quarter from roughly 360,000 sq ft in Q2 2021.

“The decrease in shadow space was expected as the flight-to-quality continued with corporates taking advantage of the rare opportunity to snap up premium spaces in prime buildings that were normally fully occupied, before rents start to increase significantly,” noted the property consultancy.

One of the demand drivers is that coworking space operators continued to expand their workspaces here in anticipation of strong demand for more flexible workspaces amidst the remote working era.

For instance, The Great Room will open its new 37,000 sq ft outlet in the new Afro-Asia I-mark building, while The Executive Centre opened its 38,736 sq ft location at One Raffles Quay North Tower.

Moreover, domestic law firm Lee & Lee is transferring from Singapore Land Tower in Raffles Place to 25 North Bridge at the intersection of High Street and North Bridge Road.

Demand for workspaces in new office projects also appears to be healthy, with over 90 percent of CapitaSpring’s office space pre-committed or in advanced negotiations, added Knight Frank. One of the new tenants that signed up there is IBM’s subsidiary Red Hat and Mitsui Banking Corporation (SMBC).