Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient
Knight Frank is taking a much more optimistic shorter-term perspective, mentioning that Singapore’s labour market remains tight, with a re-employment rate of 71.7% in 1Q2023, more than the pre-pandemic level of 65.9%, while overall unemployment remained low at 1.8%.
Rents for prime workplaces in the CBD region saw small growth in 2Q2023, based upon real estates tracked by consultants. In a June 26 press release, CBRE notes that efficient gross rental fees for Quality An offices in the main CBD area registered 0.4% growth q-o-q to reach $11.80 psf monthly. The firm includes that openings prices for the sector stayed reasonable at 4%, underpinned by stable net absorption and no new source.
The growth in 2Q2023 takes rentals increase for Grade A core CBD workplaces to 0.9% for 1H2023. David McKellar, CBRE co-head of office services in Singapore, states the overall office market still sees well-balanced interest, added by the maritime industry, exclusive wealth and even property management firms, law practice, professional services, along with state agencies. The quarter also saw restored development in renting demand by flexible work area providers, that have seen enhanced occupancy prices in their centres.
CBRE notes that view remains mindful amid the current high-interest rate environment and slackening financial development projections. It adds that shadow office space in the market continues to be “rather high” and might potentially improve in the second part of the year. CBRE’s head of analysis for Singapore and Southeast Asia, Tricia Song, claims that occupiers in technology, cryptocurrency and even consumer financial might consider giving up workplace because of challenging business conditions.
In its 2Q2023 workplace field report, Knight Frank Research discovered that rents for top grade workplaces it monitor in the Raffles Place and Marina Bay district climbed 1.2% q-o-q to standard at $10.96 psf monthly. It adds that this carried rental development to 2.5% in the very first part of 2023 amid escalating geopolitical tensions, cost-push inflations and dominating financial gloom.
CBRE expects Grade A CBD workplace leas to stay reasonably flat for the remainder of the year before recovering in 2024. “With a solid pattern of air travel to quality, in the middle of a reducing pool of quality offices in the CBD, Core CBD (Grade A) rents are topped for long-term growth,” adds Tune.
With strict inventory in the CBD and also tenancy levels sustained by flight-to-safety including flight-to-quality trends, Knight Frank foresees potentially higher leas than previously predicted. It predicts prime office rents to grow in between 3% and also 5% this year, an enhancement from the estimated 3% growth forecast made by the end of 2022.
Knight Frank says occupancy levels in Raffles Place also Marina Bay stayed healthy, coming out at 95.8% and 94.4%, respectively, in 2Q2023, as organizations continued to seek quality spaces in the CBD.