Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient
CBRE notes that view remains mindful amidst the current high-interest rate atmosphere and subsiding financial growth estimates. It adds that shadow workplace in the marketplace continues to be “fairly high” and might potentially increase in the 2nd part of the year. CBRE’s head of research for Singapore and Southeast Asia, Tricia Song, says that occupiers in technology, cryptocurrency and even consumer banking might look into quiting office in light of challenging company problems.
CBRE expects Grade A CBD workplace rental fees to remain fairly standard for the rest of the year prior to recovering in 2024. “With a strong trend of air travel to premium, amidst a reducing pool of top quality workplaces in the CBD, Core CBD (Grade A) leas are keyed for lasting development,” adds Song.
In its 2Q2023 workplace sector report, Knight Frank Research discovered that leas for top quality offices it tracks in the Raffles Place and Marina Bay precinct climbed 1.2% q-o-q to average at $10.96 psf monthly. It includes that this brought rental development to 2.5% in the first half of 2023 in the middle of growing geopolitical stress, inflationary pressures and prevailing financial gloom.
The growth in 2Q2023 takes rentals boost for Quality A core CBD offices to 0.9% for 1H2023. David McKellar, CBRE co-head of workplace solutions in Singapore, claims the general office market still sees healthy interest, contributed by the maritime market, private wealth and even asset administration companies, law practice, professional services, along with government agencies. The quarter additionally saw renewed growth in leasing demand by flexible office suppliers, who have noticed boosted tenancy prices in their centres.
Knight Frank is taking an extra positive shorter-term perspective, mentioning that Singapore’s work market continues to be tight, with a re-employment price of 71.7% in 1Q2023, greater than the pre-pandemic level of 65.9%, while total joblessness remained low at 1.8%.
Knight Frank says tenancy degrees in Raffles Place and Marina Bay stayed healthy, coming in at 95.8% and even 94.4%, respectively, in 2Q2023, as services remained to seek quality places in the CBD.
Rents for prime offices in the CBD neighborhood saw marginal development in 2Q2023, based on real estates traced by specialists. In a June 26 press release, CBRE notes that effective gross rents for Grade A business offices in the main CBD area registered 0.4% development q-o-q to reach $11.80 psf monthly. The company includes that vacancy prices for the segment continued to be low at 4%, underpinned by steady net absorption and no new source.
With tight inventory in the CBD and also tenancy levels maintained by flight-to-safety including flight-to-quality trends, Knight Frank predicts possibly higher rents than previously forecasted. It predicts prime office rents to grow between 3% and also 5% this year, an improvement from the approximated 3% growth forecast made by the end of 2022.