Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient
In its 2Q2023 workplace industry record, Knight Frank Research found that rents for top quality workplaces it monitor in the Raffles Place and also Marina Bay district increased 1.2% q-o-q to average at $10.96 psf monthly. It adds that this brought rental development to 2.5% in the first half of 2023 amid escalating geopolitical tensions, inflationary pressures and also dominating economic gloom.
The growth in 2Q2023 carries rentals boost for Grade A core CBD workplaces to 0.9% for 1H2023. David McKellar, CBRE co-head of workplace services in Singapore, says the overall office market still sees well-balanced need, contributed by the maritime sector, exclusive wealth and asset administration business, law practice, professional solutions, and government agencies. The quarter additionally found renewed development in renting demand by versatile work space providers, who have actually seen boosted occupancy rates in their centres.
CBRE notes that sentiment remains careful amid the present high-interest price atmosphere and easing financial growth projections. It adds that shadow office space in the marketplace continues to be “quite high” and might potentially raise 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 consumer financial might think about quiting office in light of difficult company problems.
CBRE expects Grade A CBD workplace rents to continue to be relatively flat for the rest of the year before recouping in 2024. “With a solid pattern of air travel to quality, amidst a shrinking pool of high quality workplaces in the CBD, Core CBD (Grade A) rental fees are keyed for long-lasting growth,” adds Song.
Rents for prime workplaces in the CBD neighborhood viewed marginal development in 2Q2023, based on properties tracked by specialists. In a June 26 announcement, CBRE notes that efficient gross rental fees for Quality A business offices in the core CBD location signed up 0.4% progress q-o-q to get to $11.80 psf monthly. The company adds that openings rates for the segment continued to be affordable at 4%, underpinned by stable net absorption and no brand-new supply.
Knight Frank is getting a much more optimistic shorter-term view, noting that Singapore’s labour market continues to be tight, with a re-employment price of 71.7% in 1Q2023, greater than the pre-pandemic degree of 65.9%, while total joblessness stayed low at 1.8%.
Knight Frank states occupancy degrees in Raffles Place and Marina Bay remained healthy, coming out at 95.8% and 94.4%, respectively, in 2Q2023, as businesses continued to seek quality places in the CBD.
With strict inventory in the CBD and occupancy levels supported by flight-to-safety and flight-to-quality trends, Knight Frank foresees potentially higher leas than formerly predicted. It forecasts prime office rental fees to grow between 3% and 5% this year, a renovation from the estimated 3% growth estimate made at the end of 2022.