Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient
Knight Frank is getting a more optimistic shorter-term perspective, mentioning that Singapore’s work market continues to be limited, with a re-employment rate of 71.7% in 1Q2023, higher than the pre-pandemic level of 65.9%, while total unemployment remained low at 1.8%.
Knight Frank claims occupancy degrees in Raffles Place and Marina Bay continued to be healthy, coming in at 95.8% and even 94.4%, respectively, in 2Q2023, as companies remained to seek quality spaces in the CBD.
CBRE anticipates Quality A CBD workplace rents to continue to be fairly standard for the remainder of the year before recuperating in 2024. “With a strong trend of air travel to quality, amidst a reducing pool of quality workplaces in the CBD, Core CBD (Grade A) leas are primed for long-lasting growth,” adds Song.
The growth in 2Q2023 carries rental rise for Quality A core CBD business offices to 0.9% for 1H2023. David McKellar, CBRE co-head of workplace services in Singapore, says the total office space market still sees healthy demand, added by the maritime industry, exclusive wealth and asset administration business, law office, professional services, along with state firms. The quarter additionally found renewed growth in renting demand by flexible work space suppliers, who have actually seen increased occupancy rates in their centres.
In its 2Q2023 office field record, Knight Frank Research identified that rents for top grade offices it tracks in the Raffles Place and also Marina Bay district climbed 1.2% q-o-q to standard at $10.96 psf each month. It includes that this brought rental development to 2.5% in the very first part of 2023 amid growing geopolitical stress, cost-push inflations and prevailing economic gloom.
With tight inventory in the CBD and also occupancy levels maintained by flight-to-safety and flight-to-quality trends, Knight Frank visualizes possibly higher rental fees than formerly predicted. It predicts prime workplace rents to grow between 3% and 5% this year, an improvement from the estimated 3% growth estimate made by the end of 2022.
Rents for prime offices in the CBD region saw small development in 2Q2023, based upon real estates traced by specialists. In a June 26 announcement, CBRE notes that effective gross rents for Grade A business offices in the core CBD location signed up 0.4% development q-o-q to reach $11.80 psf monthly. The firm adds that openings costs for the sector continued to be affordable at 4%, underpinned by secure net absorption and no brand-new source.
CBRE notes that sentiment continues to be cautious amid the present high-interest price environment along with subsiding economic growth projections. It adds that shadow workplace in the marketplace continues to be “quite high” and can likely increase in the second part of the year. CBRE’s head of analysis for Singapore and Southeast Asia, Tricia Song, states that occupiers in technology, cryptocurrency along with consumer financial may consider giving up office space in light of difficult company conditions.