Singapore’s CBD Grade A Office Rents Up 2.3% In Q1
SINGAPORE – Data from Jones Lang LaSalle (JLL) showed that rents of Grade A office space in the city-state’s central business district (CBD) continued to rise during the first quarter, edging up by 2.3 percent or the highest quarter-on-quarter growth here ever since office rents started to recover from Q2 2021, reported The Business Times on Tuesday afternoon (29 March, SGT).
Specifically, CBD Grade A office rents in Singapore rose to S$10.46 psf per month in Q1 2022 from S$10.23 psf per month during the preceding quarter.
This represents the 3rd straight quarter of rising growth within Singapore’s overall CBD office market, where rents have rebounded by a total of 6.9 percent from the recent trough of S$9.79 psf per month during the first quarter of last year.
In particular, the Marina Bay submarket recorded the highest quarterly office rental growth among the city-state’s four CBD office submarkets. There, CBD Grade A office rents climbed 3.2 percent from S$11.77 psf per month in Q4 2021 to S$12.14 psf per month during the first quarter of this year.
According to JLL’s Research Head Tay Huey Ying, the demand at this office submarket was propelled by tenants’ preference for newer and good quality commercial properties, amidst “concerted efforts to ensure employees are returning to healthy working environments and sustainable workplaces”.
She credits the Q1 2022’s overall CBD office rental growth to solid demand for office space, as firms acknowledge the crucial role of brick-and-mortar offices in their overall workplace strategy.
Notable office rental transactions during the period include KPMG agreeing to occupy around 100,000 sq ft in Asia Square Tower 2. Moreover, the upcoming Guoco Midtown project is understood to have signed on more occupants during the period under review.
“Active demand for office space continues to come from the technology, consumer and non-bank financial sectors,” noted Andrew Tangye, Head of office leasing and advisory at JLL.
In Q1 2022, Tangye observed a “clear trend” of demand broadening to include a wider range of industries. “This comes as more businesses position themselves for growth amid the recovering global and Singapore economies.”
The latest rental gain suggests that Singapore’s overall CBD Grade A rents remain on-track to grow twice as fast in 2022 as the office sector continues to benefit from the back-to-office recovery momentum, said JLL.
Furthermore, Tay thinks it should be not long before all staff will be permitted to return to their office, barring new variants of COVID-19.
“The prospects of the CBD returning to its former vibrant self should spur more occupiers to secure office spaces in preparation for their employees’ return and position their businesses for growth as Singapore’s economy and international borders open further.”
“At the same time, we are expecting some companies to abort plans to downsize as business activities pick up and employees start to stream back to the office,” she added.