Grade A office rents to maintain strong growth trajectory as vacancies fall
Grade A office rents to maintain strong growth trajectory as vacancies fall. Rental of Grade A offices in Singapore’s Central Business District (CBD) will remain robust in the near term, as demand rises and vacancy levels fall further in Q3, according to a Savills Research research released on Wednesday (Oct 19). Savills Singapore’s research arm maintained their projection for Grade A CBD office rent growth of 3% for the entire year of 2022, but also forecasted that rents would rise by 2% year on year in 2023.
According to the firm’s data, Grade A CBD office rentals increased 1.4 percent year on year in Q3 – the most in a quarter since Q4 2019, when rents increased 2.9 percent year on year. Rents climbed 0.3% quarter on quarter to S$9.50 per square foot. This is slightly lower than the previous quarter, when there was a 0.4% gain quarter on quarter. It is also the third consecutive quarter of rent increases. Among the seven submarkets examined by the study team, Marina Bay witnessed the highest quarter-on-quarter rent growth, at 1.1% to S$12.31 psf. This is the highest rate of rise since the first quarter of 2019, when rentals increased by 3.7%. Beach Road/Middle Road and Raffles Place were next, with rents rising 0.6% to S$7.78 psf and 0.3% to S$9.68 psf, respectively, from the previous quarter.
Meanwhile, vacancy rates in CBD Grade A offices tracked by Savills fell for the second consecutive quarter in Q3 and at a faster rate, increasing by 1.2 percentage points to 5.6%, compared to 0.4 percentage points in Q2. According to Savills, this is attributable to increased demand for CBD Grade A offices. Net demand for these office spaces climbed to 417,000 sq ft this quarter, bringing the total net take-up of office space for the first three quarters of 2022 to 612,000 sq ft.
This is expected, according to Savills, due to inflationary pressures, increasing interest rates, and persistent geopolitical concerns.
Click the image to read the full details of report:
Discover Your Home Here
Come & Experience It Yourselves
Connect With Us