Healthy take-up in new Grade A office space, but rents to stay stable: Morgan Stanley
Morgan Stanley adds that significantly of the anchor lessee take-up at new Grade An office buildings appears to be driven by occupiers moving from older CBD buildings. This flight to quality can underpin greater openings in the secondary industry that can bring about erosion of rental growth as property managers lower rents to fill such rooms, the record clarifies.
IOI Central Blvd Towers, a Grade An office property development on Central Blvd in the CBD, is nearing full tenancy. Last month, The Edge Singapore mentioned that the newly finalized project with 1.24 million sq ft of office space is around 75% committed.
Earlier this month, Keppel South Central, a 33-storey business high rise in Tanjong Pagar, achieved its short slot permit. In a Feb 10 statement, Keppel revealed nearly 50% of the workplace and retail place at the project was dedicated or being proactively negotiated.
According to a February research study record by Morgan Stanley, Singapore Grade A workplace rental fees are expected to continue to be steady in 2025, even as the workplace market sees healthy take-up amongst new growths.
A mainstay renter has additionally been guaranteed for the structure, which is claimed to be Manulife, Morgan Stanley’s statement adds.
Amongst the tenants at IOI Central Blvd Towers is Morgan Stanley, the mainstay lessee of the 48-storey West Tower. Amazon will most likely occupy the entire 16-storey East Tower.
Regardless of the resilient take-up, Morgan Stanley anticipates office market leas to remain stable in 2025. The firm is maintaining its Grade A business office rental forecast unmodified at $12 psf monthly for this year, similar to the year before.
The firm mentions a couple of factors for its expectation: market rents tracked by CBRE stayed secure last year maybe even as IOI Central Boulevard Towers has been continuously leased up. Furthermore, mainstay occupant rents, on a psf basis, have a tendency to be lower contrasted to other leases in just the exact same structure. “So the new lease at Keppel South Central is unlikely to place much upward pressure on market hires,” the record reads.
In any case, whilst workplace industry leas are expected to continue to be secure, Morgan Stanley anticipates rent reversions– describing adjustments in rents upon the finalizing of a fresh lease– to stay in the positive single-digit range this year.
