Office rents up 2.4% in 2Q2022 on return-to-office momentum
Lam Chern Woon, head of research and consulting at Edmund Tie, emphasize that noteworthy leasing activity in 2Q2022 consists of Amazon’s reported take-up of 369,000 sq ft of space 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 likewise got traction in leasing event throughout the quarter, with lessees like ConocoPhillips and also Swiss Re coming on board.
Office rents in the Main area grew by 2.4% q-o-q in the second quarter, according to information published by URA on July 22. This is greater than the 1.6% increase reported in the previous quarter and registers a third consecutive quarter of development.
Looking ahead, while the return-to-office momentum will certainly continue thrusting the workplace leasing market, there are signs that worldwide financial headwinds are starting to impact some tenants’ property choices, which might temper workplace need in 2H2022, claims Tay Huey Ying, head of study and consultancy, Singapore at JLL.
Nevertheless, she prepares for full-year growth for CBD Grade A gross efficient rents can still multiply the 4.3% appeared 2021, considered that they have currently climbed by 5% in the first half of the year.
The stronger performance was underpinned by Singapore further easing workplace limitations, with 100% of staff members permitted to return to the workplace since April 26.
“This positive take-up was likely helped by displacement activity, in addition to brand-new set-ups in the lawful area as well as non-bank financial institutions,” mentions Tricia Song, CBRE head of research, Singapore and Southeast Asia. Song includes there was also a decrease of 473,612 sq ft in workplace stock, likely due to the elimination of AXA Tower as it commenced demolition works, which additionally sustained lower vacancy rates.
Catherin He, head of research, Singapore at Colliers, mentions that the rental growth was broad-based, with typical rental fees of both Category 1 and Group 2 office increasing q-o-q by 0.9% as well as 4% respectively. Based upon a basket of office complex tracked by Colliers Research study, rents of the Core CBD Premium & Grade A segment increased by 1.8% from the preceding quarter to $11.10 psf per month.
The islandwide office openings price decreased by 0.8 percentage indicate 12%, driven by good net absorption of 258,334 sq ft in 2Q2022. This marks a change after 5 continuous quarters of adverse net absorption.
Leonard Tay, head of research study at Knight Frank Singapore, believes that office rental fees will certainly hold firm in spite of a feasible economic crisis, backed by demand driven by the “flight to safety” to Singapore by private wealthy, corporates and MNCs. Knight Frank preserves a calculation of 3% to 5% growth in leas for the entire of 2022.
