Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient
In its 2Q2023 office industry record, Knight Frank Research identified that leas for prime grade workplaces it tracks in the Raffles Place and Marina Bay precinct rose 1.2% q-o-q to standard at $10.96 psf monthly. It adds that this brought rental development to 2.5% in the first half of 2023 amid growing geopolitical stress, inflationary pressures and also dominating financial gloom.
With strict inventory in the CBD and tenancy levels sustained by flight-to-safety plus flight-to-quality patterns, Knight Frank anticipates probably much higher leas than formerly forecasted. It projects prime workplace rental fees to expand in between 3% and also 5% this year, a renovation from the approximated 3% development forecast made by the end of 2022.
CBRE expects Quality A CBD office rents to continue to be fairly standard for the remainder of the year prior to recouping in 2024. “With a solid fad of flight to quality, amidst a diminishing pool of top quality offices in the CBD, Core CBD (Grade A) rental fees are primed for long-lasting development,” adds Track.
CBRE notes that belief remains careful amidst the present high-interest rate setting along with slackening financial development estimates. It includes that shadow workplace in the market continues to be “rather high” and could potentially increase in the second part of the year. CBRE’s head of research for Singapore and Southeast Asia, Tricia Song, states that occupants in technology, cryptocurrency along with consumer banking might consider giving up workplace in light of challenging business conditions.
The development in 2Q2023 carries rentals boost 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 market still sees healthy interest, contributed by the maritime industry, private wealth and property administration firms, law office, professional services, and government agencies. The quarter also saw renewed growth in leasing demand by versatile workspace suppliers, who have seen increased tenancy rates in their centres.
Rents for prime offices in the CBD neighborhood observed small growth in 2Q2023, based on real estates traced by consultants. In a June 26 news release, CBRE notes that efficient gross leas for Grade A workplaces in the core CBD area registered 0.4% progress q-o-q to reach $11.80 psf each month. The company includes that openings rates for the section remained reasonable at 4%, underpinned by secure net absorption and no new supply.
Knight Frank says occupancy levels in Raffles Place and Marina Bay continued to be healthy, coming in at 95.8% and even 94.4%, respectively, in 2Q2023, as organizations remained to look for high quality places in the CBD.
Knight Frank is taking a much more positive shorter-term perspective, mentioning that Singapore’s labour market stays limited, with a re-employment price of 71.7% in 1Q2023, higher than the pre-pandemic degree of 65.9%, while overall unemployment stayed low at 1.8%.
