Singapore office rents fall in 3Q2023 on weaker demand: JLL
Three workplace projects are set up for finalization in the CBD over the next 24 months– IOI Central Blvd Towers (1.3 million sq ft) along with Keppel South Central (0.6 million sq ft) in 2024, and the redeveloped Shaw Tower (0.4 million sq ft) in early 2025. JLL states that to date, over 1.5 million sq ft is estimated to be still uncommitted.
Beyond the short-term headwinds, the medium-term expectation for Singapore’s Level A CBD workplace leasing market continues to be brilliant, JLL says. Need will be supported by Singapore’s blossoming reputation as a global hub, while the supply of office space in the CBD will continue to be constricted by a scarcity of greenfield sites along with URA’s focus on injecting even more live and play spots downtown.
The decrease comes from ongoing economic pressures, claims Andrew Tangye, head of office space leasing and advisory for JLL Singapore. “The uncertain near-term forecast originating from a combination of lagging economic development, geopolitical stress and climbing costs have remained to keep occupiers cautious and cost-conscious, causing weak workplace take-up,” he adds.
She expects downward force on office rents to intensify, with hires fixing even more in the coming months amidst the existing macroeconomic setting as well as arriving office supply. “Opposing the backdrop of an increase of coming projects competing for a very little pool of occupants, the temporary oversupply of office can become a lot more pronounced,” she adds.
He attributes the lesser rentals to much more supply from office stock being actually gone back to the marketplace “at an escalating pace” as more occupiers right-size upon lease renewal to manage expenses.
JLL’s research shows that gross reliable lease for Level A workplace in the CBD slipped 0.3% q-o-q to an average of $11.29 psf monthly in 3Q2023, down from $11.32 psf per month in 2Q2023.
Singapore office space leas declined in 3Q2023, according to data reported by JLL in a Sept 25 press release. The consultancy includes that it denotes the initial quarterly downtrend adhering to nine consecutive quarters of office space rental growth in the city-state.
Tay Huey Ying, JLL Singapore’s head of study as well as consultancy, concurs, including that office rent modification ended up being much more prevalent this previous quarter. “Our analysis reveals that greater than 15 properties regulated lower hires in 3Q2023 than in 2Q2023, which grabbed down the common leas for CBD Grade A space for the very first time ever since they turned around in 2Q2021.”