Office rents up 2.4% in 2Q2022 on return-to-office momentum
The islandwide workplace vacancy price lowered by 0.8 percent indicate 12%, driven by favorable net absorption of 258,334 sq ft in 2Q2022. This marks a turnaround after 5 successive quarters of unfavorable net absorption.
The stronger performance was underpinned by Singapore even more alleviating work environment restrictions, with 100% of staff members permitted to return to the office after April 26.
Workplace rents in the Main region expanded by 2.4% q-o-q in the 2nd quarter, according to data released by URA on July 22. This is greater than the 1.6% increase recorded in the previous quarter as well as registers a 3rd successive quarter of development.
Leonard Tay, head of research study at Knight Frank Singapore, believes that office rents will certainly hold firm in spite of a possible economic downturn, backed by necessity driven by the “flight to safety” to Singapore by special well-off, corporates and MNCs. Knight Frank maintains a forecast of 3% to 5% expansion in rents for the entire of 2022.
Looking ahead, while the return-to-office momentum will continue thrusting the office leasing market, there are signs that international financial headwinds are opening to impact some tenants’ property decisions, which can toughen up office interest in 2H2022, says Tay Huey Ying, head of study and consultancy, Singapore at JLL.
“This good take-up was most likely helped by displacement task, in addition to brand-new sets up in the legal area and also non-bank financial institutions,” says Tricia Song, CBRE head of research study, Singapore and Southeast Asia. Song includes there was even a loss of 473,612 sq ft in workplace stock, likely because of the elimination of AXA Tower as it commenced demolition works, which further sustained lower vacancy rates.
Catherin He, head of research, Singapore at Colliers, notes that the rental development was broad-based, with typical rental fees of both Category 1 and Category 2 workplace increasing q-o-q by 0.9% and also 4% specifically. Based upon a basket of office buildings tracked by Colliers Study, leas of the Core CBD Premium & Grade A section expanded by 1.8% from the coming before quarter to $11.10 psf per month.
However, she prepares for full-year success for CBD Grade A gross efficient rental fees might still multiply the 4.3% appeared 2021, given that they have currently risen by 5% in the initial part of the year.
Lam Chern Woon, head of study and consulting at Edmund Tie, highlights that notable leasing activity in 2Q2022 includes Amazon’s reported take-up of 369,000 sq ft of room at the upcoming IOI Central Blvd Towers as well as Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, increasing its office footprint. The upcoming Guoco Midtown property likewise obtained traction in leasing activity throughout the quarter, with tenants like ConocoPhillips as well as Swiss Re coming on board.
