Singapore office rents have increased for the sixth straight quarter in the third quarter of 2018, coming closer to beating the last high seen at the start of 2015, amid near-term tightening in CBD (central business district) space and strong demand from occupiers.
Research from consultancy JLL showed that gross effective rents of Grade A office space in the CBD edged up 2.3 per cent quarter on quarter in the third quarter (Q3) of 2018 to average $9.93 per sq ft (psf) per month.
That means an 18 per cent increase over the six quarters, putting rents just 6 per cent below the Q1 2015 peak of $10.56 psf per month.
Chris Archibold, head of leasing, JLL Singapore, said: “Occupier demand has been firm, coming from a wide spectrum of industries, although co-working operators remained the single most active space seekers given their expansion spree as they race to gain market share.
“On the other hand, good quality office space in the CBD is limited as most new builds are enjoying near full occupancy or commitment rates, while space vacated or to be vacated by relocating tenants has mostly secured replacements. This has continued to put upward pressure on rents.”
Rent growth in the quarter was broad-based across all sub-markets, said JLL. But the pace of CBD Grade A rent growth has also been decelerating for three consecutive quarters, from a recent high of 4.2 per cent quarter on quarter in Q4 2017, to 2.3 per cent quarter on quarter in Q3 2018.
This was cheered by Tay Huey Ying, head of research and consultancy for JLL Singapore, as a positive, “as it makes for a more sustainable growth trajectory”, she said.
Ms Tay added: “Singapore’s CBD Grade A office rent is well-positioned for sustainable steady growth in the near and mid-term. The demand and supply dynamics of Grade A office space in the CBD is supportive of continued rent growth, but the availability of good grade office space outside the CBD during this period should keep growth in check and sustainable.”
Source: Straits Times