Singapore's Office Market

Singapore’s Office Market In 2022 To Be Similar To H1 2021

SINGAPORE – Some experts believe that most companies here will adopt a wait-and-see approach and embrace a flexible strategy in terms of the office space allocation next year, as the Omicron variant and other potential COVID-19 mutations cause more uncertainty, reported The Edge on Tuesday afternoon (21 December, SGT).

For most of next year, “we believe that it will be very much like what transpired in the second half of 2021 where companies remained cautious about mandating workers to return to the office”, commented Alan Cheong, Executive Director of research and consultancy at Savills Singapore.

To adapt to the uncertainty, most occupants are expected to right-size for a period of at least a single lease cycle of 3 to 5 years. Still, those that may likely expand are family offices and tech firms, including those involved with social media, he noted.

In fact, Cheong pointed out that “many of the tech and related unicorns already have a toe hold in Singapore and are presently in coworking premises”.

Due to the uncertainty over when staff can finally return to their workplace, flexibility is expected to be a top priority for businesses. In turn, this trend is expected to change the offerings of commercial property owners, said Tricia Song, Research Head for Southeast Asia at CBRE.

“Pre-COVID, some landlords have already been partnering flexible workspace operators to offer such space in their buildings.”

For example, CapitaLand has teamed up and invested in The Work Project, likewise for CDL and coworking space operator Distrii, as well as Frasers and coworking space provider Justco. In addition, other property developers have created their own flexible workspace brands, like Keppel Land’s Kloud, as well as CapitaLand and Ascendas’ Bridge+.

In the upcoming Guoco Midtown project in Tan Quee Lan Street at Bugis, developer GuocoLand has dedicated 15 percent of the development’s office net lettable area (NLA) for coworking space.

Despite the uncertainty next year, CBRE expects an overall expansion of office space, especially in the CBD Grade A market as tech tenants, coworking space operators, and non-banking financial services firms like asset managers and wealth management continue to grow, explained Song.

Furthermore, CBRE is anticipating 3 office developments to be completed next year. In Singapore’s fringe CBD, these include Guoco Midtown (0.67 million sq ft) and redevelopment of Hub Synergy Point (0.13 million sq ft). The sole office project in the decentralised submarket to become available come 2022 is Rochester Commons (0.20 million sq ft), which reportedly has been preleased by Sea Ltd.
Meanwhile, Savills’ Cheong expects that effective rents of CBD Grade A office space would rise marginally by 0 to 2 percent next year. “The supply in 2022 will have little bearing on rents because it is expected to be relatively low,” he added.

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