Office rents up 2.4% in 2Q2022 on return-to-office momentum

Workplace rents in the Main area expanded by 2.4% q-o-q in the 2nd quarter, according to data released by URA on July 22. This is higher than the 1.6% increase recorded in the previous quarter and registers a third successive quarter of progress.

Catherin He, head of research study, Singapore at Colliers, notes that the rental growth was broad-based, with typical rental fees of both Group 1 and Classification 2 office spaces enhancing q-o-q by 0.9% as well as 4% specifically. Based upon a basket of office buildings tracked by Colliers Research, rents of the Core CBD Premium & Grade A section rose by 1.8% from the coming before quarter to $11.10 psf monthly.

The stronger performance was underpinned by Singapore better reducing work environment restrictions, with 100% of employees allowed to go back to the office after April 26.

Leonard Tay, head of research study at Knight Frank Singapore, believes that office leas will certainly hold firm despite a possible economic crisis, backed by need driven by the “flight to safety” to Singapore by special affluent, corporates and MNCs. Knight Frank maintains a projection of 3% to 5% development in rental fees for the whole of 2022.

However, she expects full-year success for CBD Grade A gross efficient rents might still double the 4.3% appeared 2021, considered that they have actually already increased by 5% in the initial part of the year.

The islandwide office openings price decreased by 0.8 percentage indicate 12%, driven by good net absorption of 258,334 sq ft in 2Q2022. This marks a change after five continuous quarters of unfavorable net absorption.

Pollen Collection Singapore

Looking in advance, while the return-to-office momentum will certainly proceed moving the workplace renting market, there are signs that international financial headwinds are opening to impact some tenants’ realty decisions, which might temper workplace need in 2H2022, says Tay Huey Ying, head of research as well as consultancy, Singapore at JLL.

Lam Chern Woon, head of study and also consulting at Edmund Tie, emphasize that remarkable leasing task in 2Q2022 includes Amazon’s reported take-up of 369,000 sq ft of space at the upcoming IOI Central Boulevard Towers and also Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, increasing its office presence. The upcoming Guoco Midtown project likewise gained traction in leasing undertaking throughout the quarter, with lessees like ConocoPhillips and also Swiss Re coming on board.

“This positive take-up was most likely added by variation activity, as well as brand-new set-ups in the legal sector as well as non-bank financial institutions,” mentions Tricia Song, CBRE head of research, Singapore and Southeast Asia. Song includes there was also a loss of 473,612 sq ft in office supply, likely because of the removal of AXA Tower as it began demolition works, which further sustained lower vacancy rates.

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