Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient

CBRE anticipates Quality A CBD office rents to continue to be relatively flat for the remainder of the year before recuperating in 2024. “With a strong fad of flight to premium, in the middle of a diminishing pool of quality workplaces in the CBD, Core CBD (Grade A) leas are keyed for long-lasting growth,” includes Song.

Knight Frank is taking a much more optimistic shorter-term view, noting that Singapore’s labour market continues to be limited, with a re-employment price of 71.7% in 1Q2023, more than the pre-pandemic degree of 65.9%, while total unemployment remained low at 1.8%.

CBRE notes that sentiment continues to be cautious in the middle of the existing high-interest rate atmosphere along with slowing financial development estimates. It includes that shadow office space in the marketplace continues to be “quite high” and could likely improve in the second half of the year. CBRE’s head of analysis for Singapore and Southeast Asia, Tricia Song, says that occupants in technology, cryptocurrency along with customer banking may consider giving up workplace in light of challenging business conditions.

With strict inventory in the CBD and also occupancy levels maintained by flight-to-safety plus flight-to-quality patterns, Knight Frank foresees potentially higher leas than formerly forecasted. It forecasts prime workplace rents to expand in between 3% and also 5% this year, an enhancement from the approximated 3% development forecast made at the end of 2022.

Knight Frank says occupancy degrees in Raffles Place and Marina Bay stayed healthy, coming out at 95.8% and even 94.4%, respectively, in 2Q2023, as companies continued to look for high quality areas in the CBD.

The growth in 2Q2023 takes rental increase for Quality A core CBD offices to 0.9% for 1H2023. David McKellar, CBRE co-head of office solutions in Singapore, says the overall office space market still sees well-balanced need, contributed by the maritime sector, exclusive wealth and property management companies, law firms, professional services, and state agencies. The quarter additionally found restored development in leasing demand by flexible work area providers, who have actually seen enhanced occupancy rates in their centres.

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Rents for prime offices in the CBD area viewed minimal development in 2Q2023, based on real estates tracked by specialists. In a June 26 news release, CBRE notes that effective gross leas for Grade An offices in the core CBD area signed up 0.4% development q-o-q to get to $11.80 psf per month. The firm adds that openings rates for the section stayed low at 4%, underpinned by stable net absorption and no new supply.

In its 2Q2023 workplace field document, Knight Frank Research discovered that leas for prime grade workplaces it tracks in the Raffles Place and Marina Bay precinct increased 1.2% q-o-q to average at $10.96 psf monthly. It adds that this brought rental development to 2.5% in the very first half of 2023 amidst growing geopolitical tensions, inflationary pressures and prevailing economic gloom.


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