Office rents up 2.4% in 2Q2022 on return-to-office momentum
Catherin He, head of study, Singapore at Colliers, mentions that the rental growth was broad-based, with mean rental fees of both Group 1 as well as Group 2 office spaces enhancing q-o-q by 0.9% and 4% respectively. Based on a basket of office complex tracked by Colliers Study, leas of the Core CBD Premium & Grade A segment increased by 1.8% from the preceding quarter to $11.10 psf monthly.
“This favorable take-up was likely contributed by displacement task, along with brand-new sets up in the lawful part as well as non-bank financial institutions,” says Tricia Song, CBRE head of research study, Singapore as well as Southeast Asia. Song includes there was even a decline of 473,612 sq ft in office supply, likely as a result of the elimination of AXA Tower as it commenced demolition jobs, which better supported reduced vacancy rates.
Office rental fees in the Central area grew by 2.4% q-o-q in the second quarter, according to data launched by URA on July 22. This is higher than the 1.6% increase reported in the previous quarter and registers a 3rd consecutive quarter of growth.
However, she anticipates full-year progress for CBD Grade A gross effective leas might still double the 4.3% appeared 2021, given that they have already increased by 5% in the first half of the year.
The islandwide workplace openings rate reduced by 0.8 percent points to 12%, driven by favorable net absorption of 258,334 sq ft in 2Q2022. This notes a turnaround after 5 continuous quarters of unfavorable net absorption.
Looking in advance, while the return-to-office momentum will proceed moving the workplace leasing market, there are indications that global financial headwinds are beginning to affect some occupiers’ realty decisions, which can toughen up workplace demand in 2H2022, claims Tay Huey Ying, head of study as well as consultancy, Singapore at JLL.
The stronger performance was underpinned by Singapore additionally alleviating work environment restrictions, with 100% of employees permitted to return to the office since April 26.
Lam Chern Woon, head of study and consulting at Edmund Tie, emphasize that noteworthy leasing task in 2Q2022 includes Amazon.com’s reported take-up of 369,000 sq ft of room at the upcoming IOI Central Boulevard Towers as well as Blackstone’s moving from Tower 2 to Tower 1 at Marina Bay Financial Centre, increasing its office footprint. The upcoming Guoco Midtown project likewise acquired traction in leasing act throughout the quarter, with occupants like ConocoPhillips and also Swiss Re coming on board.
Leonard Tay, head of research at Knight Frank Singapore, thinks that workplace rental fees will hold firm despite a possible economic downturn, backed by demand driven by the “flight to safety” to Singapore by private rich, corporates and MNCs. Knight Frank maintains a calculation of 3% to 5% development in leas for the entire of 2022.