Office rents up 2.4% in 2Q2022 on return-to-office momentum
Workplace leas in the Main area expanded by 2.4% q-o-q in the 2nd quarter, according to data launched by URA on July 22. This is greater than the 1.6% boost recorded in the previous quarter and also marks a 3rd successive quarter of expansion.
The more powerful performance was underpinned by Singapore even more relieving work environment restrictions, with 100% of workers allowed to return to the office as April 26.
Catherin He, head of research study, Singapore at Colliers, notes that the rental development was broad-based, with average rents of both Category 1 and also Category 2 workplace raising q-o-q by 0.9% as well as 4% specifically. Based upon a basket of office complex tracked by Colliers Study, rental fees of the Core CBD Premium & Grade A segment expanded by 1.8% from the coming before quarter to $11.10 psf monthly.
Lam Chern Woon, head of study as well as consulting at Edmund Tie, highlights that remarkable leasing task in 2Q2022 includes Amazon.com’s reported take-up of 369,000 sq ft of room at the upcoming IOI Central Blvd Towers and also Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, increasing its workplace presence. The upcoming Guoco Midtown property additionally obtained grip in leasing undertaking throughout the quarter, with tenants like ConocoPhillips as well as Swiss Re coming on board.
“This positive take-up was most likely helped by variation task, in addition to brand-new sets up in the legal part and also non-bank financial institutions,” mentions Tricia Song, CBRE head of research, Singapore and also Southeast Asia. Song includes there was also a reduction of 473,612 sq ft in workplace stock, likely as a result of the elimination of AXA Tower as it commenced demolition works, which additionally supported reduced vacancy rates.
However, she expects full-year progress for CBD Grade A gross efficient rental fees could still increase the 4.3% clocked in 2021, considered that they have actually already climbed by 5% in the very first half of the year.
The islandwide workplace openings price lowered by 0.8 percent points to 12%, driven by good net absorption of 258,334 sq ft in 2Q2022. This notes a change after 5 continuous quarters of unfavorable net absorption.
Looking in advance, while the return-to-office momentum will certainly carry on driving the workplace leasing market, there are signs that global financial headwinds are beginning to influence some tenants’ real estate choices, which might solidify workplace need in 2H2022, says Tay Huey Ying, head of 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 recession, backed by need driven by the “flight to safety” to Singapore by exclusive wealthy, corporates and MNCs. Knight Frank preserves a calculation of 3% to 5% development in rental fees for the whole of 2022.