Office rents up 2.4% in 2Q2022 on return-to-office momentum
Office rental fees in the Main region grew by 2.4% q-o-q in the 2nd quarter, according to information published by URA on July 22. This is more than the 1.6% boost reported in the previous quarter and registers a third successive quarter of progress.
Lam Chern Woon, head of research as well as consulting at Edmund Tie, highlights that remarkable 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 moving from Tower 2 to Tower 1 at Marina Bay Financial Centre, increasing its workplace presence. The upcoming Guoco Midtown development likewise acquired grip in leasing event throughout the quarter, with occupants like ConocoPhillips as well as Swiss Re coming on board.
The more powerful performance was underpinned by Singapore additionally alleviating workplace limitations, with 100% of workers enabled to go back to the office since April 26.
Leonard Tay, head of study at Knight Frank Singapore, thinks that workplace rents will hold firm despite a feasible economic crisis, backed by need driven by the “flight to safety” to Singapore by special affluent, corporates and MNCs. Knight Frank keeps a forecast of 3% to 5% growth in leas for the entire of 2022.
The islandwide office vacancy price reduced by 0.8 percentage points to 12%, driven by positive net absorption of 258,334 sq ft in 2Q2022. This marks a turnaround after 5 continuous quarters of negative net absorption.
Nevertheless, she expects full-year success for CBD Grade A gross effective leas can still multiply the 4.3% clocked in 2021, given that they have actually currently increased by 5% in the very first half of the year.
Catherin He, head of research, Singapore at Colliers, indicates that the rental growth was broad-based, with mean rents of both Category 1 and Classification 2 office raising q-o-q by 0.9% and 4% respectively. Based on a basket of office complex tracked by Colliers Study, leas of the Core CBD Premium & Grade A sector rose by 1.8% from the preceding quarter to $11.10 psf per month.
Looking in advance, while the return-to-office force will certainly continue propelling the workplace leasing market, there are indicators that worldwide economic headwinds are starting to affect some inhabitants’ property decisions, which might temper workplace interest in 2H2022, says Tay Huey Ying, head of research study and also consultancy, Singapore at JLL.
“This good take-up was likely helped by variation task, as well as brand-new sets up in the lawful sector as well as non-bank financial institutions,” remarks Tricia Song, CBRE head of research study, Singapore and also Southeast Asia. Song includes there was even a decrease of 473,612 sq ft in office supply, likely as a result of the elimination of AXA Tower as it began demolition jobs, which additionally sustained reduced vacancy rates.