Office rents up 2.4% in 2Q2022 on return-to-office momentum
Lam Chern Woon, head of research study and also consulting at Edmund Tie, highlights that notable leasing activity in 2Q2022 includes Amazon’s reported take-up of 369,000 sq ft of room at the upcoming IOI Central Blvd Towers as well as Blackstone’s moving from Tower 2 to Tower 1 at Marina Bay Financial Centre, increasing its office footprint. The upcoming Guoco Midtown development also got grip in leasing event during the quarter, with lessees like ConocoPhillips as well as Swiss Re coming on board.
Office rents in the Main region grew by 2.4% q-o-q in the 2nd quarter, according to information published by URA on July 22. This is higher than the 1.6% boost documented in the previous quarter as well as marks a 3rd successive quarter of expansion.
The islandwide office openings price reduced by 0.8 percent indicate 12%, driven by good net absorption of 258,334 sq ft in 2Q2022. This notes a reversal after five continuous quarters of negative net absorption.
However, she expects full-year growth for CBD Grade A gross reliable leas might still increase the 4.3% appeared 2021, considered that they have currently risen by 5% in the first half of the year.
The stronger performance was underpinned by Singapore better alleviating work environment limitations, with 100% of employees enabled to return to the office as April 26.
Leonard Tay, head of study at Knight Frank Singapore, thinks that office rental fees will certainly hold firm despite a possible recession, backed by necessity driven by the “flight to safety” to Singapore by special wealthy, corporates and MNCs. Knight Frank preserves a projection of 3% to 5% development in rental fees for the whole of 2022.
Looking in advance, while the return-to-office momentum will certainly continue propelling the office renting market, there are indications that international economic headwinds are starting to influence some occupiers’ real estate decisions, which could temper office interest in 2H2022, says Tay Huey Ying, head of study as well as consultancy, Singapore at JLL.
Catherin He, head of study, Singapore at Colliers, notes that the rental growth was broad-based, with typical rents of both Category 1 and also Category 2 office increasing q-o-q by 0.9% and 4% respectively. Based upon a basket of office complex tracked by Colliers Research, rental fees of the Core CBD Premium & Grade A sector expanded by 1.8% from the coming before quarter to $11.10 psf each month.
“This good take-up was most likely helped by displacement activity, in addition to brand-new set-ups in the lawful part and non-bank financial institutions,” says Tricia Song, CBRE head of research, Singapore and also Southeast Asia. Song adds there was also a loss of 473,612 sq ft in office supply, likely because of the elimination of AXA Tower as it began demolition works, which further sustained reduced vacancy prices.