Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient
Knight Frank is taking an extra confident shorter-term perspective, noting that Singapore’s work market stays tight, with a re-employment price of 71.7% in 1Q2023, greater than the pre-pandemic degree of 65.9%, while general unemployment remained reduced at 1.8%.
CBRE notes that belief stays cautious in the middle of the current high-interest rate atmosphere along with slowing financial development projections. It includes that shadow office space in the marketplace stays “fairly high” and might possibly raise in the 2nd half of the year. CBRE’s head of analysis for Singapore and Southeast Asia, Tricia Song, states that occupiers in technology, cryptocurrency and customer banking might consider giving up office in light of challenging business problems.
In its 2Q2023 workplace field report, Knight Frank Research identified that rents for prime grade workplaces it monitor in the Raffles Place and Marina Bay precinct increased 1.2% q-o-q to standard at $10.96 psf monthly. It adds that this brought rental growth to 2.5% in the initial half of 2023 in the middle of growing geopolitical tensions, cost-push inflations and prevailing financial gloom.
With strict inventory in the CBD and also tenancy levels supported by flight-to-safety and flight-to-quality patterns, Knight Frank anticipates probably higher leas than previously predicted. It predicts prime office rents to expand between 3% and also 5% this year, an improvement from the estimated 3% development estimate made by the end of 2022.
CBRE anticipates Quality A CBD office rents to remain fairly flat for the remainder of the year before recouping in 2024. “With a strong trend of air travel to quality, amidst a reducing pool of quality workplaces in the CBD, Core CBD (Grade A) rents are keyed for long-term development,” adds Track.
Rents for prime offices in the CBD region saw small growth in 2Q2023, based on real estates tracked by specialists. In a June 26 news release, CBRE notes that reliable gross rents for Grade A workplaces in the main CBD place registered 0.4% growth q-o-q to reach $11.80 psf per month. The firm includes that vacancy rates for the sector continued to be low at 4%, underpinned by secure net absorption and no new source.
The development in 2Q2023 brings rental increase for Grade A core CBD business offices to 0.9% for 1H2023. David McKellar, CBRE co-head of office solutions in Singapore, claims the overall office space market still sees well-balanced need, added by the maritime market, private wealth and property administration companies, law office, professional solutions, and state agencies. The quarter additionally saw renewed development in leasing need by versatile work area providers, that have noticed increased occupancy prices in their centres.
Knight Frank claims tenancy levels in Raffles Place also Marina Bay continued to be healthy, coming in at 95.8% and 94.4%, respectively, in 2Q2023, as businesses remained to look for high quality places in the CBD.