Singapore CBD Grade A office rents book fastest quarterly growth since recovery
GRADE A office rents in Singapore’s Central Business District (CBD) continued their steady upward momentum in Q1 2022 to register their highest pace of growth since rents turned around in Q2 2021, according to JLL Singapore.
Based on figures provided by the firm on Tuesday (Mar 29), Grade A CBD office rents rose 2.3 per cent to S$10.46 per square foot (psf) per month in the latest quarter from S$10.23 in Q4 2021.
This marks the third consecutive quarter of accelerated growth within the overall CBD office space, where rents have recovered by a total of 6.9 per cent from the recent bottom of S$9.79 psf per month in Q1 2021.
Notably, Marina Bay experienced the sharpest quarter-on-quarter rent growth among the 4 CBD submarkets tracked by JLL – rising 3.2 per cent to S$12.14 psf per month from S$11.77 psf per month in Q4 2021.
Tay Huey Ying, JLL’s head of research and consultancy, said demand for this area was driven by occupiers’ preference for newer and good quality developments due to “concerted efforts to ensure employees are returning to healthy working environments and sustainable workplaces”.
She attributes the latest quarter’s overall CBD rent growth to stronger demand for office space as corporates acknowledge the critical role of physical offices in their overall workplace strategy, even as the hybrid-working conversation continues.
Major leasing deals in Q1 2022 include KPMG taking up about 100,000 square feet in Asia Square Tower 2. The upcoming Guoco Midtown is also understood to have signed on more tenants in Q1 2022.
“Active demand for office space continues to come from the technology, consumer and non-bank financial sectors,” said Andrew Tangye, head of office leasing and advisory for JLL.
In the latest quarter, Tangye observed a “clear trend” of demand broadening to encompass a wider range of industries.
“This comes as more businesses position themselves for growth amid the recovering global and Singapore economies,” he added.
The latest figures indicate that overall CBD Grade A rents remain on-track to rise twice as fast in 2022 as the office market continues to benefit from the back-to-office recovery momentum, said JLL.
Barring new variants of Covid-19, it should be not long before all employees will be allowed to return to the workplace, said Tay.
“The prospects of the CBD returning to its former vibrant self should spur more occupiers to secure office spaces in preparation for their employees’ return and position their businesses for growth as Singapore’s economy and international borders open further. At the same time, we are expecting some companies to abort plans to downsize as business activities pick up and employees start to stream back to the office,” she added.
On the capital front, JLL’s head of capital markets Ting Lim believes the Singapore office investment market looks set to continue to attract a wide range of capital in 2022, underpinned by an upbeat leasing market outlook as well as the latest restrictions imposed on the individual strata subdivision.
“Assets in prime locations will continue to see capital growth given the scarcity of opportunities,” stated Lim.
Source: The Business Times, 30 Mar 2022
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