Office rents up 2.4% in 2Q2022 on return-to-office momentum
The stronger performance was underpinned by Singapore additionally reducing work environment constraints, with 100% of employees allowed to go back to the workplace since April 26.
“This good take-up was likely added by displacement activity, along with brand-new set-ups in the lawful part and also non-bank financial institutions,” says Tricia Song, CBRE head of study, Singapore and also Southeast Asia. Song adds there was also a reduction of 473,612 sq ft in workplace supply, likely due to the removal of AXA Tower as it commenced demolition works, which further sustained reduced vacancy rates.
Nonetheless, she expects full-year growth for CBD Grade A gross efficient rents might still multiply the 4.3% clocked in 2021, given that they have actually currently increased by 5% in the initial part of the year.
Catherin He, head of study, Singapore at Colliers, notes that the rental growth was broad-based, with median rents of both Classification 1 and Classification 2 workplace raising q-o-q by 0.9% and 4% specifically. Based on a basket of office buildings tracked by Colliers Study, leas of the Core CBD Premium & Grade A sector grew by 1.8% from the coming before quarter to $11.10 psf per month.
Workplace rental fees in the Main region grew by 2.4% q-o-q in the second quarter, according to data released by URA on July 22. This is more than the 1.6% rise recorded in the previous quarter and views a 3rd successive quarter of expansion.
Leonard Tay, head of study at Knight Frank Singapore, thinks that workplace leas will certainly hold firm regardless of a feasible economic downturn, backed by need driven by the “flight to safety” to Singapore by exclusive rich, corporates and also MNCs. Knight Frank preserves a forecast of 3% to 5% growth in rents for the entire of 2022.
Looking ahead, while the return-to-office force will certainly carry on driving the workplace renting market, there are indications that international economic headwinds are starting to affect some inhabitants’ property choices, which might solidify workplace need in 2H2022, claims Tay Huey Ying, head of study as well as consultancy, Singapore at JLL.
Lam Chern Woon, head of study and also consulting at Edmund Tie, highlights that notable leasing task in 2Q2022 includes Amazon.com’s reported take-up of 369,000 sq ft of room at the upcoming IOI Central Blvd Towers and Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, doubling its workplace presence. The upcoming Guoco Midtown project also obtained grip in leasing event throughout the quarter, with renters like ConocoPhillips and also Swiss Re coming on board.
The islandwide office openings rate lowered by 0.8 percent indicate 12%, driven by good net absorption of 258,334 sq ft in 2Q2022. This notes a turnaround after five continuous quarters of adverse net absorption.