Singapore office rents fall in 3Q2023 on weaker demand: JLL

The decline originates from recurring economic pressures, states Andrew Tangye, head of workplace leasing as well as advisory for JLL Singapore. “The uncertain near-term outlook originating from a mixture of lagging economic progress, geopolitical stress and climbing costs have remained to maintain occupiers careful and cost-conscious, resulting in weaker workplace take-up,” he adds.

Three workplace projects are set up for conclusion in the CBD over the following 24 months– IOI Central Boulevard 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 very early 2025. JLL states that to date, over 1.5 million sq ft is predicted to be still uninvolved.

Tay Huey Ying, JLL Singapore’s head of study as well as consultancy, concurs, putting in that office lease correction became extra widespread this past quarter. “Our analysis reveals that greater than 15 properties commanded lower rents in 3Q2023 than in 2Q2023, which dragged down the common hires for CBD Grade An area for the first time since they turned around in 2Q2021.”

Beyond the short-term headwinds, the medium-term outlook for Singapore’s Grade A CBD office space leasing market remains bright, JLL opines. Demand will be upheld by Singapore’s burgeoning reputation as a global center, while the supply of office space in the CBD will certainly remain constricted by a shortage of greenfield sites in addition to URA’s focus on injecting more live and play spaces downtown.

She expects downward pressure on workplace rental fees to escalate, with leas correcting even more in the coming months amidst the existing macroeconomic environment as well as arriving office supply. “Against the backdrop of an increase of future projects competing for a small pool of lessees, the short-term balance of office could become a lot more pronounced,” she includes.

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JLL’s analysis presents that gross efficient rental for Grade An office in the CBD fell 0.3% q-o-q to around $11.29 psf monthly in 3Q2023, down from $11.32 psf each month in 2Q2023.

He associates the reduced rentals to more supply from office space stock being actually gone back to sale “at an increasing rate” as more occupiers right-size upon rental renewal to handle expenses.

Singapore office space leas slid in 3Q2023, according to information reported by JLL in a Sept 25 press release. The consultancy adds that it observes the very first quarterly downtrend adhering to 9 continuous quarters of office space rental growth in the city-state.

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