Office rents up 2.4% in 2Q2022 on return-to-office momentum
Catherin He, head of research study, Singapore at Colliers, mentions that the rental growth was broad-based, with typical leas of both Group 1 and Group 2 office spaces raising q-o-q by 0.9% as well as 4% specifically. Based upon a basket of office buildings tracked by Colliers Research study, rental fees of the Core CBD Premium & Grade A sector expanded by 1.8% from the coming before quarter to $11.10 psf monthly.
The stronger performance was underpinned by Singapore even more relieving workplace limitations, with 100% of employees allowed to go back to the office since April 26.
“This good take-up was most likely helped by variation activity, as well as brand-new set-ups in the legal part and also non-bank financial institutions,” remarks Tricia Song, CBRE head of study, Singapore and Southeast Asia. Song adds there was even a reduction of 473,612 sq ft in office supply, likely due to the elimination of AXA Tower as it began demolition works, which better sustained reduced vacancy rates.
The islandwide office openings price lowered by 0.8 percent points to 12%, driven by favorable net absorption of 258,334 sq ft in 2Q2022. This notes a reversal after five continuous quarters of negative net absorption.
Workplace rental fees in the Central region grew by 2.4% q-o-q in the 2nd quarter, according to data released by URA on July 22. This is more than the 1.6% boost documented in the previous quarter as well as views a third consecutive quarter of development.
Looking ahead, while the return-to-office momentum will certainly proceed propelling the office leasing market, there are indications that international financial headwinds are starting to influence some occupiers’ real estate decisions, which might toughen up office demand in 2H2022, says Tay Huey Ying, head of study and also consultancy, Singapore at JLL.
Nevertheless, she anticipates full-year progress for CBD Grade A gross reliable rental fees can still multiply the 4.3% clocked in 2021, given that they have actually currently risen by 5% in the very first half of the year.
Lam Chern Woon, head of research study and consulting at Edmund Tie, highlights that noteworthy leasing task in 2Q2022 consists of Amazon’s reported take-up of 369,000 sq ft of space at the upcoming IOI Central Boulevard Towers as well as Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, doubling its office presence. The upcoming Guoco Midtown project additionally got grip in leasing activity throughout the quarter, with tenants like ConocoPhillips as well as Swiss Re coming on board.
Leonard Tay, head of research study at Knight Frank Singapore, believes that workplace rental fees will hold firm despite a possible recession, backed by need driven by the “flight to safety” to Singapore by private wealthy, corporates and MNCs. Knight Frank keeps a forecast of 3% to 5% growth in rents for the entire of 2022.
