Office rents up 2.4% in 2Q2022 on return-to-office momentum
Lam Chern Woon, head of study and consulting at Edmund Tie, emphasize that noteworthy leasing activity in 2Q2022 includes Amazon.com’s reported take-up of 369,000 sq ft of room at the upcoming IOI Central Blvd Towers and also Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, doubling its workplace presence. The upcoming Guoco Midtown development likewise gained traction in leasing act during the quarter, with renters like ConocoPhillips as well as Swiss Re coming on board.
Leonard Tay, head of research at Knight Frank Singapore, believes that office rental fees will hold firm in spite of a feasible recession, backed by demand driven by the “flight to safety” to Singapore by special wealthy, corporates and MNCs. Knight Frank maintains a forecast of 3% to 5% growth in leas for the entire of 2022.
However, she anticipates full-year success for CBD Grade A gross reliable leas could still double the 4.3% clocked in 2021, considered that they have currently increased by 5% in the initial part of the year.
The more powerful performance was underpinned by Singapore better reducing work environment constraints, with 100% of staff members enabled to return to the workplace after April 26.
The islandwide workplace vacancy price reduced by 0.8 percentage points to 12%, driven by favorable net absorption of 258,334 sq ft in 2Q2022. This notes a reversal after 5 continuous quarters of unfavorable net absorption.
Looking in advance, while the return-to-office momentum will certainly carry on thrusting the workplace leasing market, there are indicators that global financial headwinds are opening to influence some tenants’ property decisions, which can solidify workplace interest in 2H2022, claims Tay Huey Ying, head of study as well as consultancy, Singapore at JLL.
Catherin He, head of research, Singapore at Colliers, mentions that the rental development was broad-based, with typical rental fees of both Classification 1 as well as Classification 2 office spaces enhancing q-o-q by 0.9% and also 4% respectively. Based on a basket of office complex tracked by Colliers Research, rents of the Core CBD Premium & Grade A section grew by 1.8% from the coming before quarter to $11.10 psf monthly.
“This favorable take-up was most likely added by displacement activity, in addition to new set-ups in the legal part and also non-bank financial institutions,” says Tricia Song, CBRE head of study, Singapore and Southeast Asia. Song adds there was even a loss of 473,612 sq ft in office stock, likely due to the removal of AXA Tower as it started demolition works, which further supported reduced vacancy rates.
Workplace rental fees in the Main area expanded by 2.4% q-o-q in the 2nd quarter, according to data launched by URA on July 22. This is more than the 1.6% rise recorded in the previous quarter as well as views a third consecutive quarter of expansion.
