Singapore office rents fall in 3Q2023 on weaker demand: JLL

Singapore business office rents decreased in 3Q2023, according to data disclosed by JLL in a Sept 25 announcement. The consultancy adds that it marks the very first quarterly decline following nine continuous quarters of office space rental development in the city-state.

Three office projects are set up for conclusion in the CBD over the following 24 months– IOI Central Blvd Towers (1.3 million sq ft) and Keppel South Central (0.6 million sq ft) in 2024, and the redeveloped Shaw Tower (0.4 million sq ft) in very early 2025. JLL states that to date, over 1.5 million sq ft is approximated to be still unaffiliated.

Beyond the temporary headwinds, the medium-term overview for Singapore’s Level A CBD workplace leasing market stays bright, JLL believes. Interest will certainly be sustained by Singapore’s blossoming credibility as a global hub, while the supply of office space in the CBD will continue to be constrained by a shortage of greenfield locations in addition to URA’s focus on adding even more live and play spaces downtown.

JLL’s analysis shows that gross reliable lease for Level An office space in the CBD slipped 0.3% q-o-q to around $11.29 psf per month in 3Q2023, below $11.32 psf per month in 2Q2023.

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He connects the reduced rents to a lot more supply from office space stock being returned to sale “at an escalating pace” as even more tenants right-size upon rent renewal to manage expenses.

She expects downward strain on workplace leas to intensify, with hires correcting even more in the coming months amidst the present macroeconomic environment and also arriving office supply. “Against the backdrop of an increase of future ventures competing for a limited pool of occupants, the temporary overrun of office space might become more pronounced,” she adds.

Tay Huey Ying, JLL Singapore’s head of study as well as consultancy, recognizes, adding that office lease adjustment ended up being much more prevalent this previous quarter. “Our study displays that more than 15 investments regulated lower hires in 3Q2023 than in 2Q2023, which dragged down the standard leas for CBD Level An area for the very first time since they shifted in 2Q2021.”

The decrease originates from ongoing economic pressures, claims Andrew Tangye, head of office leasing as well as advisory for JLL Singapore. “The uncertain near-term overview originating from a mix of slowing down economic growth, geopolitical tensions and increasing prices have actually remained to keep occupiers wary plus cost-conscious, causing weaker office space take-up,” he includes.