Singapore’s Core CBD Grade A Office Rents Edge Up In Q3
SINGAPORE – While data from JLL showed that CBD Grade A office rents dipped in the third quarter, statistics from CBRE showed a different picture, reported The Edge on Tuesday noon (26 September, SGT).
According to CBRE, Grade A office rents in Singapore’s core central business district (CBD) inched up by 0.4 percent quarter-on-quarter in Q3 2023 to S$11.85 psf per month, while office vacancy slid from 4 percent to 3.2 percent over the same period.
For the property consultancy, the core CBD encompasses Marina Bay, Raffles Place, Shenton Way, and the Marina Centre.
CBRE said the office rental uptick occurred amidst higher office rental activity. As a matter of fact, office net absorption rose to 0.11 million sq ft during the July-September quarter from 0.03 million sq ft for the first half of 2023.
The higher office leasing activity also follows a fall in shadow office space arising from the retrenchments in the tech sector, said CBRE’s Co-head of office services in Singapore David McKeller. In the period under review, shadow office space halved to 0.33 million sq ft from the record high of 0.7 million sq ft during the first quarter of the year.
“Occupiers in co-working and asset management have been among the various businesses that have taken up chunks of these shadow spaces, seizing the opportunities to move into fitted office spaces in the prime Marina Bay and Raffles Place areas,” he noted, adding that improved office utilisation and the return of more staff to their workplace also contributed to the better office space demand.
Despite higher interest rates and cautious economic prospects, CBRE pointed out that Singapore’s Grade A office market has outperformed expectations, with office rents edging up 1.3 percent since the beginning of 2023.
“The delayed completion of IOI Central Boulevard Towers to Q1 2024 should keep market vacancy low and maintain landlords’ confidence for the remainder of 2023,” added CBRE’s Research Head for Singapore and Southeast Asia, Tricia Song.
Looking ahead, CBRE forecasted that Singapore’s core CBD Grade A office rents could grow between 1.5 percent and 2 percent for the entirety of 2023.