Singapore office rents fall in 3Q2023 on weaker demand: JLL
Three office ventures are scheduled for finalization in the CBD over the next 24 months– IOI Central Boulevard Towers (1.3 million sq ft) and also Keppel South Central (0.6 million sq ft) in 2024, and also the redeveloped Shaw Tower (0.4 million sq ft) in very early 2025. JLL states that to date, over 1.5 million sq ft is estimated to be still uninvolved.
Beyond the short-term headwinds, the medium-term outlook for Singapore’s Grade A CBD workplace renting out market remains rich, JLL believes. Interest will certainly be upheld by Singapore’s expanding reputation as a global center, while the supply of office in the CBD will stay constricted by a scarcity of greenfield locations in addition to URA’s emphasis on adding even more live and play places downtown.
She prepares for downward pressure on office leas to heighten, with leas dealing with further in the coming months amid the existing macroeconomic environment and also incoming office supply. “Against the backdrop of an increase of upcoming projects fighting for a small pool of tenants, the temporary balance of office space could become a lot more pronounced,” she adds.
Singapore office space rents dropped in 3Q2023, according to information disclosed by JLL in a Sept 25 announcement. The consultancy includes that it marks the initial quarterly downtrend adhering to nine continuous quarters of office rental growth in the city-state.
The decline originates from ongoing economic tensions, states Andrew Tangye, head of office space leasing as well as advisory for JLL Singapore. “The unclear near-term overview stemming from a combination of slowing financial progress, geopolitical stress and climbing costs have continued to maintain tenants careful plus cost-conscious, resulting in weaker workplace take-up,” he includes.
JLL’s analysis shows that gross reliable rental for Grade A workplace in the CBD dropped 0.3% q-o-q to around $11.29 psf monthly in 3Q2023, below $11.32 psf each month in 2Q2023.
He associates the lower hires to extra supply from office space supply being returned to sale “at an increasing pace” as even more tenants right-size upon rental renewal to manage prices.
Tay Huey Ying, JLL Singapore’s head of study and also consultancy, recognizes, adding that workplace lease improvement came to be extra prevalent this previous quarter. “Our analysis displays that greater than 15 assets regulated lesser rents in 3Q2023 than in 2Q2023, which grabbed down the standard leas for CBD Grade An area for the first time since they reversed in 2Q2021.”