Prime office rents see marginal growth in 2Q2023, but occupancy rates stay resilient
Rents for prime offices in the CBD neighborhood saw minimal development in 2Q2023, based on real estates traced by specialists. In a June 26 press release, CBRE notes that effective gross rental fees for Quality A workplaces in the center CBD location signed up 0.4% development q-o-q to reach $11.80 psf per month. The company includes that vacancy rates for the sector continued to be affordable at 4%, underpinned by stable net absorption and no new source.
CBRE notes that sentiment continues to be careful in the middle of the existing high-interest price setting and slackening financial development projections. It includes that shadow workplace in the marketplace remains “quite high” and could possibly increase in the 2nd part of the year. CBRE’s head of research for Singapore and Southeast Asia, Tricia Song, says that occupants in technology, cryptocurrency and customer banking might consider giving up office space in light of challenging company problems.
The development in 2Q2023 brings rentals rise for Quality A core CBD business offices to 0.9% for 1H2023. David McKellar, CBRE co-head of workplace solutions in Singapore, claims the general workplace market still sees healthy need, contributed by the maritime industry, exclusive wealth and asset management companies, law office, professional services, along with government firms. The quarter also found restored growth in leasing demand by versatile office providers, that have seen increased tenancy rates in their centres.
In its 2Q2023 office field record, Knight Frank Research found that rents for prime quality offices it monitor in the Raffles Place and also Marina Bay precinct climbed 1.2% q-o-q to standard at $10.96 psf monthly. It adds that this brought rental development to 2.5% in the very first half of 2023 in the middle of rising geopolitical tensions, cost-push inflations and dominating financial gloom.
Knight Frank says occupancy levels in Raffles Place and Marina Bay remained healthy, coming in at 95.8% and 94.4%, respectively, in 2Q2023, as companies remained to seek quality spaces in the CBD.
With tight inventory in the CBD and tenancy levels supported by flight-to-safety including flight-to-quality patterns, Knight Frank foresees possibly higher rental fees than formerly forecasted. It forecasts prime office rents to grow in between 3% and 5% this year, an enhancement from the estimated 3% growth projection made by the end of 2022.
Knight Frank is getting an extra optimistic shorter-term view, noting that Singapore’s labour market remains limited, with a re-employment price of 71.7% in 1Q2023, more than the pre-pandemic degree of 65.9%, while overall unemployment stayed low at 1.8%.
CBRE expects Quality A CBD workplace rental fees to remain reasonably flat for the remainder of the year before recouping in 2024. “With a strong trend of air travel to quality, in the middle of a shrinking pool of high quality workplaces in the CBD, Core CBD (Grade A) rental fees are keyed for lasting growth,” adds Tune.