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

Singapore office rents declined in 3Q2023, according to information reported by JLL in a Sept 25 announcement. The consultancy includes that it marks the first quarterly downturn following 9 constant quarters of office rental growth in the city-state.

JLL’s research presents that gross effective lease for Grade An office in the CBD dropped 0.3% q-o-q to an average of $11.29 psf each month in 3Q2023, below $11.32 psf each month in 2Q2023.

She anticipates downward force on office leas to increase, with rents correcting even more in the coming months amidst the current macroeconomic setting as well as incoming workplace supply. “Opposing the backdrop of an increase of coming ventures fighting for a small pool of lessees, the temporary overrun of workplace could become a lot more pronounced,” she includes.

The decline originates from continuous economic forces, claims Andrew Tangye, head of office leasing and also advisory for JLL Singapore. “The unclear near-term overview stemming from a mixture of lagging financial progress, geopolitical stress and climbing costs have remained to keep tenants wary and cost-conscious, leading to weaker office take-up,” he adds.

Midtown Modern condo

Past the short-term headwinds, the medium-term outlook for Singapore’s Grade A CBD office space renting market continues to be rich, JLL opines. Demand will be upheld by Singapore’s expanding credibility as a global center, while the supply of office space in the CBD will remain constricted by a lack of greenfield sites in addition to URA’s focus on adding more live and play places downtown.

Three office projects are set up for finalization in the CBD over the next 24 months– IOI Central Boulevard Towers (1.3 million sq ft) and 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.

He attributes the lesser rentals to a lot more supply from workplace supply being actually returned to the market “at a raising pace” as more occupants right-size upon rent renewal to handle expenses.

Tay Huey Ying, JLL Singapore’s head of research study and consultancy, concords, adding that office lease correction came to be much more prevalent this previous quarter. “Our evaluation reveals that greater than 15 investments regulated lower hires in 3Q2023 than in 2Q2023, which grabbed down the standard leas for CBD Level An area for the first time ever since they reversed in 2Q2021.”

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