Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient
CBRE expects Quality A CBD office rental fees to remain relatively standard for the remainder of the year before recouping in 2024. “With a solid fad of flight to premium, amidst a shrinking pool of top quality offices in the CBD, Core CBD (Grade A) rental fees are topped for long-term growth,” includes Song.
Knight Frank is taking an extra confident shorter-term perspective, mentioning that Singapore’s labour market stays limited, with a re-employment rate of 71.7% in 1Q2023, more than the pre-pandemic level of 65.9%, while overall joblessness stayed low at 1.8%.
Rents for prime offices in the CBD neighborhood viewed marginal growth in 2Q2023, based on real estates tracked by consultants. In a June 26 press release, CBRE notes that effective gross leas for Quality An offices in the core CBD area registered 0.4% growth q-o-q to get to $11.80 psf monthly. The company adds that openings costs for the section stayed reasonable at 4%, underpinned by stable net absorption and no brand-new source.
In its 2Q2023 office field report, Knight Frank Research discovered that leas for top quality workplaces it monitor in the Raffles Place and Marina Bay district increased 1.2% q-o-q to average at $10.96 psf per month. It adds that this carried rental development to 2.5% in the very first half of 2023 amidst rising geopolitical stress, cost-push inflations and also prevailing economic gloom.
Knight Frank states tenancy levels in Raffles Place and Marina Bay remained healthy, coming out at 95.8% and 94.4%, respectively, in 2Q2023, as companies remained to seek quality areas in the CBD.
With tight inventory in the CBD and occupancy levels supported by flight-to-safety including flight-to-quality trends, Knight Frank predicts probably much higher rents than previously predicted. It projects prime workplace leas to expand in between 3% and also 5% this year, an improvement from the estimated 3% development forecast made by the end of 2022.
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The improvement in 2Q2023 takes rental rise for Grade A core CBD business offices to 0.9% for 1H2023. David McKellar, CBRE co-head of office solutions in Singapore, says the general workplace market still sees healthy interest, provided by the maritime sector, exclusive wealth and asset management companies, law office, professional solutions, and government agencies. The quarter also found restored development in renting demand by versatile office providers, that have seen boosted occupancy prices in their centres.
CBRE notes that sentiment stays careful in the middle of the present high-interest price setting and subsiding financial growth estimates. It includes that shadow workplace in the marketplace remains “quite high” and could potentially increase in the second half of the year. CBRE’s head of analysis for Singapore and Southeast Asia, Tricia Song, claims that occupiers in technology, cryptocurrency and even consumer financial may consider giving up office space in light of tough business conditions.
