Office rents up 2.4% in 2Q2022 on return-to-office momentum
Workplace leas in the Central region grew by 2.4% q-o-q in the second quarter, according to data released by URA on July 22. This is more than the 1.6% increase recorded in the previous quarter as well as marks a 3rd successive quarter of expansion.
“This positive take-up was likely contributed by displacement activity, as well as brand-new sets up in the legal area as well as non-bank financial institutions,” remarks Tricia Song, CBRE head of research study, Singapore as well as Southeast Asia. Song adds there was also a loss of 473,612 sq ft in office stock, likely as a result of the elimination of AXA Tower as it started demolition works, which further sustained lower vacancy prices.
Nonetheless, she expects full-year growth for CBD Grade A gross efficient rents might still double the 4.3% appeared 2021, considered that they have currently climbed by 5% in the first half of the year.
The islandwide office openings rate lowered by 0.8 percent points to 12%, driven by positive net absorption of 258,334 sq ft in 2Q2022. This notes a change after five successive quarters of unfavorable net absorption.
Leonard Tay, head of research study at Knight Frank Singapore, believes that workplace rental fees will hold firm in spite of a feasible economic downturn, backed by need driven by the “flight to safety” to Singapore by exclusive wealthy, corporates and also MNCs. Knight Frank preserves a calculation of 3% to 5% expansion in rents for the entire of 2022.
Looking ahead, while the return-to-office force will proceed driving the office leasing market, there are indications that global financial headwinds are beginning to affect some inhabitants’ realty choices, which can temper office need in 2H2022, claims Tay Huey Ying, head of research as well as consultancy, Singapore at JLL.
The stronger efficiency was underpinned by Singapore even more reducing workplace limitations, with 100% of employees enabled to return to the workplace since April 26.
Catherin He, head of research, Singapore at Colliers, mentions that the rental growth was broad-based, with typical rental fees of both Group 1 and also Group 2 workplace raising q-o-q by 0.9% and 4% specifically. Based on a basket of office buildings tracked by Colliers Research, rental fees of the Core CBD Premium & Grade A section grew by 1.8% from the coming before quarter to $11.10 psf per month.
Lam Chern Woon, head of research study and also consulting at Edmund Tie, highlights that notable leasing activity in 2Q2022 includes Amazon’s reported take-up of 369,000 sq ft of area at the upcoming IOI Central Blvd Towers and Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, doubling its office presence. The upcoming Guoco Midtown project likewise obtained traction in leasing activity throughout the quarter, with lessees like ConocoPhillips and also Swiss Re coming on board.