Office rents up 2.4% in 2Q2022 on return-to-office momentum
Leonard Tay, head of research at Knight Frank Singapore, thinks that office leas will certainly hold firm despite a possible recession, backed by need driven by the “flight to safety” to Singapore by special wealthy, corporates and MNCs. Knight Frank keeps a calculation of 3% to 5% growth in leas for the whole of 2022.
Catherin He, head of research, Singapore at Colliers, mentions that the rental growth was broad-based, with typical leas of both Group 1 and also Category 2 office spaces boosting q-o-q by 0.9% and also 4% specifically. Based upon a basket of office complex tracked by Colliers Study, rents of the Core CBD Premium & Grade A sector increased by 1.8% from the preceding quarter to $11.10 psf per month.
Lam Chern Woon, head of research and also consulting at Edmund Tie, highlights that notable leasing activity in 2Q2022 includes Amazon’s reported take-up of 369,000 sq ft of room at the upcoming IOI Central Boulevard Towers and Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, doubling its office footprint. The upcoming Guoco Midtown project additionally acquired traction in leasing activity throughout the quarter, with renters like ConocoPhillips as well as Swiss Re coming on board.
The stronger performance was underpinned by Singapore further relieving office restrictions, with 100% of employees allowed to go back to the office after April 26.
Nevertheless, she anticipates full-year development for CBD Grade A gross efficient rental fees can still increase the 4.3% appeared 2021, considered that they have currently increased by 5% in the initial part of the year.
Looking in advance, while the return-to-office force will continue driving the office leasing market, there are indicators that global economic headwinds are beginning to impact some tenants’ realty choices, which might solidify workplace demand in 2H2022, claims Tay Huey Ying, head of study and consultancy, Singapore at JLL.
The islandwide workplace openings price reduced by 0.8 percent points to 12%, driven by favorable net absorption of 258,334 sq ft in 2Q2022. This notes a turnaround after five continuous quarters of unfavorable net absorption.
“This good take-up was likely added by displacement task, in addition to new set-ups in the lawful sector as well as non-bank financial institutions,” remarks Tricia Song, CBRE head of study, Singapore and also Southeast Asia. Song adds there was also a decrease of 473,612 sq ft in office stock, likely as a result of the removal of AXA Tower as it started demolition jobs, which further sustained lower vacancy prices.
Office rental fees in the Central area grew by 2.4% q-o-q in the second quarter, according to data launched by URA on July 22. This is higher than the 1.6% increase documented in the previous quarter and also registers a 3rd successive quarter of growth.