Singapore office rents fall in 3Q2023 on weaker demand: JLL

JLL’s research shows that gross effective rent for Grade A workplace in the CBD fell 0.3% q-o-q to approximately $11.29 psf monthly in 3Q2023, down from $11.32 psf monthly in 2Q2023.

She prepares for downward strain on workplace rental fees to escalate, with hires correcting further in the coming months amid the present macroeconomic setting and arriving office supply. “Opposing the backdrop of an influx of coming projects challenging for a limited pool of tenants, the short-term oversupply of workplace can become more noticable,” she includes.

Three office jobs are set up for finalization in the CBD over the following 24 months– IOI Central Boulevard Towers (1.3 million sq ft) and also Keppel South Central (0.6 million sq ft) in 2024, and also the redeveloped Shaw Tower (0.4 million sq ft) in very early 2025. JLL states that to date, over 1.5 million sq ft is estimated to be still uninvolved.

Tay Huey Ying, JLL Singapore’s head of research study as well as consultancy, concords, adding that office rental modification became much more extensive this previous quarter. “Our study reveals that more than 15 assets commanded lesser hires in 3Q2023 than in 2Q2023, which grabbed down the common leas for CBD Grade A space for the very first time since they shifted in 2Q2021.”

Singapore office rental fees decreased in 3Q2023, according to data disclosed by JLL in a Sept 25 news release. The consultancy includes that it observes the very first quarterly downtrend adhering to nine constant quarters of office rental growth in the city-state.

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He associates the reduced rents to much more supply from office stock being returned to sale “at an escalating pace” as even more occupants right-size upon rental renewal to handle costs.

Past the temporary headwinds, the medium-term outlook for Singapore’s Level A CBD office renting out market remains rich, JLL suggests. Need will certainly be sustained by Singapore’s expanding reputation as a global center, while the supply of workplace in the CBD will certainly remain constricted by a lack of greenfield locations in addition to URA’s focus on adding more live and play places downtown.

The decline originates from continuous economic pressures, says Andrew Tangye, head of workplace leasing as well as advisory for JLL Singapore. “The unclear near-term outlook coming from a mix of lagging economic development, geopolitical stress and climbing prices have remained to maintain occupants cautious plus cost-conscious, causing weak office space take-up,” he adds.

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