Office rents up 2.4% in 2Q2022 on return-to-office momentum
The stronger performance was underpinned by Singapore better reducing workplace constraints, with 100% of staff members enabled to return to the office after April 26.
Looking in advance, while the return-to-office momentum will certainly continue pushing the office leasing market, there are signs that worldwide financial headwinds are starting to influence some inhabitants’ realty choices, which can toughen up workplace demand in 2H2022, says Tay Huey Ying, head of research and consultancy, Singapore at JLL.
Catherin He, head of research, Singapore at Colliers, mentions that the rental growth was broad-based, with average rents of both Classification 1 and also Category 2 workplace boosting q-o-q by 0.9% and also 4% respectively. Based on a basket of office buildings tracked by Colliers Research, rents of the Core CBD Premium & Grade A sector rose by 1.8% from the preceding quarter to $11.10 psf each month.
Leonard Tay, head of study at Knight Frank Singapore, believes that workplace rental fees will certainly hold firm in spite of a possible economic crisis, backed by necessity driven by the “flight to safety” to Singapore by exclusive wealthy, corporates as well as MNCs. Knight Frank maintains a forecast of 3% to 5% expansion in rental fees for the entire of 2022.
“This positive take-up was likely contributed by displacement activity, in addition to brand-new sets up in the lawful sector as well as non-bank financial institutions,” remarks Tricia Song, CBRE head of research study, Singapore and also Southeast Asia. Song adds there was also a reduction of 473,612 sq ft in workplace stock, likely as a result of the removal of AXA Tower as it commenced demolition works, which even more supported lower vacancy prices.
The islandwide office openings price reduced by 0.8 percentage indicate 12%, driven by positive net absorption of 258,334 sq ft in 2Q2022. This marks a change after 5 consecutive quarters of negative net absorption.
Lam Chern Woon, head of research and also consulting at Edmund Tie, highlights that significant leasing activity in 2Q2022 consists of Amazon’s reported take-up of 369,000 sq ft of room at the upcoming IOI Central Boulevard Towers and also Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, increasing its workplace footprint. The upcoming Guoco Midtown property likewise got grip in leasing activity during the quarter, with lessees like ConocoPhillips and also Swiss Re coming on board.
Nonetheless, she prepares for full-year development for CBD Grade A gross effective rents could still increase the 4.3% clocked in 2021, considered that they have already climbed by 5% in the very first part of the year.
Office leas in the Main area expanded by 2.4% q-o-q in the second quarter, according to information released by URA on July 22. This is higher than the 1.6% rise reported in the previous quarter and registers a 3rd successive quarter of growth.
