Singapore Office Supply To Remain Tight: Savills
SINGAPORE – Real estate consultancy Savills forecasted that office stock in the city-state will remain limited in the coming years after new office supply was stable from 2020 to 2022, reported The Edge on Tuesday afternoon (20 June, SGT).
“While office space in most developed economies faces excess supply in the coming years, Singapore remains a relatively tight market due to a lack of new supply, which offsets the expected decrease in demand as companies adopt hybrid work models,” said Alan Cheong, Executive Director for research and consultancy at Savills Singapore.
In its latest Future Office Availability Index, Savills revealed that 1.9 million sq ft of net lettable area (NLA) of new office space is poised to enter Singapore’s office market for the whole of 2023. Of this, 1.26 million sq ft will come solely from IOI Central Boulevard. Between 2024 and 2028, new office stock in the city-state is expected to reach 3.196 million sq ft (NLA).
Meanwhile, there will be a greater likelihood that major cities in the United States will have higher office availability as compared to Singapore.
For instance, 30 percent of the office supply in San Francisco is currently either vacant or will return to the market by 2024 – the highest office availability rate in 30 years. Previously, San Francisco had one of the lowest office availability rates in the country at 9.5 percent before the COVID-19 pandemic struck.
“Singapore’s office market may buck the trend observed in the US, as local authorities manage the supply of land available for large-scale office developments,” explained Marcus Loo, Chief Executive of Savills Singapore.
“The narrative (of the local office sector) will revolve around a limited supply-driven market and the increase in secondary stock,” he added.
Furthermore, Savills disclosed that a growing number of staff are returning to their workplace in Singapore. These are led by companies in the banking and financial sector. Businesses from South Korea, Japan, and China are also establishing a presence here. However, the property consultancy noted that tech firms continue to adopt flexible working arrangements.