Singapore Office Space Demand Up In Q3

SINGAPORE – Data from Cushman & Wakefield (C&W) shows that net demand for office space across the city-state increased to 283,000 sq ft in the 3rd quarter of this year compared to 183,000 sq ft during the same period in 2020, reported The Straits Times on Friday afternoon (8 October, SGT).

In particular, net demand for Grade A office space in Singapore’s central business district (CBD) rose to 215,000 sq ft, said the real estate consultancy.

However, the net inventory of available office space remained high. This led to office vacancy rate rising to 5.8 percent during the period under review compared to 4.6 percent in Q2 2021.

Nonetheless, C&W’s Research Head in Singapore Wong Xian Yang foresees that the office vacancy level will decline soon, as “a substantial amount of Grade A vacant spaces are currently under negotiation and are likely to be snapped up over the next few months.”

“The positive economic outlook for Singapore and the recovering global economy, coupled with accelerated vaccinations – which will allow further reopening of key advanced economies – will be supportive of Singapore’s open economy and help to prop up business sentiment,” he added.

Moreover, C&W data shows that CBD Grade A office rents rose for the 2nd straight quarter, increasing by 0.5 percent in Q3 2021 on a quarterly basis.

The rental growth was led by Marina Bay, where Grade A office rents edged up by 1.6 percent quarter-on-quarter, followed by Raffles Place (0.3 percent) and Shenton Way/Tanjong Pagar (0.1 percent).

At the same time, rental growth of Grade B office space in the CBD turned positive, rising by 0.1 percent following 4 consecutive quarters of contraction.

Cushman & Wakefield noted that, historically, rental recovery is first seen in the Grade A office space segment, followed by the Grade B workspaces.

C&W’s Executive Director and Head of commercial leasing in Singapore, Mark Lampard, pointed out that the city-state remains as an enticing business destination, especially among tech firms and financial institutions, as well as family offices, healthcare and life sciences companies and Chinese firms.

“These sectors will remain the key drivers of office space demand for the rest of the year, going into 2022,” Lampard added.