Office rents up 2.4% in 2Q2022 on return-to-office momentum
Catherin He, head of research, Singapore at Colliers, notes that the rental growth was broad-based, with average rental fees of both Group 1 and also Classification 2 workplace raising q-o-q by 0.9% and 4% respectively. Based upon a basket of office buildings tracked by Colliers Research, rents of the Core CBD Premium & Grade A section rose by 1.8% from the preceding quarter to $11.10 psf per month.
Lam Chern Woon, head of study as well as consulting at Edmund Tie, highlights that significant leasing activity in 2Q2022 includes Amazon.com’s reported take-up of 369,000 sq ft of area at the upcoming IOI Central Blvd Towers as well as Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, increasing its workplace footprint. The upcoming Guoco Midtown project additionally gained grip in leasing undertaking during the quarter, with renters like ConocoPhillips as well as Swiss Re coming on board.
“This good take-up was most likely helped by variation task, as well as brand-new set-ups in the lawful sector and also non-bank financial institutions,” mentions Tricia Song, CBRE head of research study, Singapore and Southeast Asia. Song adds there was even a reduction of 473,612 sq ft in workplace stock, likely because of the removal of AXA Tower as it commenced demolition jobs, which even more sustained lower vacancy rates.
The stronger efficiency was underpinned by Singapore better relieving workplace restrictions, with 100% of staff members enabled to return to the office after April 26.
Nonetheless, she anticipates full-year growth for CBD Grade A gross effective rental fees can still multiply the 4.3% clocked in 2021, given that they have actually currently increased by 5% in the initial part of the year.
Leonard Tay, head of study at Knight Frank Singapore, thinks that workplace rental fees will hold firm despite a feasible economic downturn, backed by demand driven by the “flight to safety” to Singapore by special wealthy, corporates as well as MNCs. Knight Frank maintains a calculation of 3% to 5% growth in rental fees for the whole of 2022.
The islandwide office vacancy price lowered by 0.8 percent points to 12%, driven by good net absorption of 258,334 sq ft in 2Q2022. This marks a reversal after five continuous quarters of unfavorable net absorption.
Looking ahead, while the return-to-office momentum will certainly carry on propelling the office leasing market, there are indicators that international economic headwinds are opening to affect some inhabitants’ realty decisions, which can temper office demand in 2H2022, says Tay Huey Ying, head of research and consultancy, Singapore at JLL.
Workplace leas in the Main region expanded by 2.4% q-o-q in the second quarter, according to data published by URA on July 22. This is higher than the 1.6% rise recorded in the previous quarter as well as views a third successive quarter of progress.