Office rents up 2.4% in 2Q2022 on return-to-office momentum
Lam Chern Woon, head of study and consulting at Edmund Tie, highlights that notable leasing activity in 2Q2022 consists of Amazon.com’s reported take-up of 369,000 sq ft of room at the upcoming IOI Central Blvd Towers and also Blackstone’s moving from Tower 2 to Tower 1 at Marina Bay Financial Centre, increasing its office footprint. The upcoming Guoco Midtown development additionally gained grip in leasing event throughout the quarter, with occupants like ConocoPhillips and also Swiss Re coming on board.
The islandwide office vacancy rate decreased by 0.8 percent indicate 12%, driven by positive net absorption of 258,334 sq ft in 2Q2022. This marks a change after five successive quarters of adverse net absorption.
Looking in advance, while the return-to-office momentum will certainly proceed pushing the office renting market, there are indicators that international economic headwinds are starting to influence some inhabitants’ real estate choices, which could temper workplace interest in 2H2022, says Tay Huey Ying, head of research study and also consultancy, Singapore at JLL.
Leonard Tay, head of research study at Knight Frank Singapore, believes that office rental fees will hold firm despite a possible economic crisis, backed by need driven by the “flight to safety” to Singapore by special well-off, corporates and also MNCs. Knight Frank preserves a forecast of 3% to 5% growth in rents for the entire of 2022.
Office rents in the Central area grew by 2.4% q-o-q in the second quarter, according to data launched by URA on July 22. This is more than the 1.6% boost documented in the previous quarter and also marks a third consecutive quarter of development.
The stronger efficiency was underpinned by Singapore even more relieving work environment constraints, with 100% of staff members allowed to go back to the office after April 26.
Catherin He, head of research, Singapore at Colliers, notes that the rental growth was broad-based, with mean leas of both Category 1 and Category 2 office spaces enhancing q-o-q by 0.9% and also 4% specifically. Based on a basket of office complex tracked by Colliers Study, leas of the Core CBD Premium & Grade A section grew by 1.8% from the coming before quarter to $11.10 psf each month.
Nevertheless, she anticipates full-year development for CBD Grade A gross efficient leas can still multiply the 4.3% clocked in 2021, given that they have actually already increased by 5% in the initial half of the year.
“This good take-up was likely contributed by variation task, along with new sets up in the legal area and non-bank financial institutions,” says Tricia Song, CBRE head of research, Singapore and also Southeast Asia. Song adds there was even a reduction of 473,612 sq ft in workplace supply, likely due to the removal of AXA Tower as it commenced demolition works, which additionally sustained reduced vacancy prices.