Healthy take-up in new Grade A office space, but rents to stay stable: Morgan Stanley
IOI Central Boulevard Towers, a Grade A business office project on Central Boulevard in the CBD, is close to full tenancy. Last month, The Edge Singapore disclosed that the recently finalized project with 1.24 million sq ft of workplace is around 75% committed.
The company points out a couple of factors for its overview: industry rental fees tracked by CBRE remained steady last year even as IOI Central Boulevard Towers has been steadily leased up. In addition, mainstay tenant rentals, on a psf basis, often tend to be cheaper compared to various other leases in just the exact same building. “So the new lease at Keppel South Central is unlikely to put much higher stress on market leas,” the report checks out.
Amongst the lessees at IOI Central Boulevard Towers is Morgan Stanley, the anchor occupant of the 48-storey West Tower. Amazon will most likely occupy the overall 16-storey East Tower.
In any case, whilst workplace market rents are foreseed to stay stable, Morgan Stanley anticipates rental fee reversions– describing modifications in rents upon the finalizing of a fresh contract– to stay in the positive single-digit range this year.
Morgan Stanley adds that much of the anchor renter take-up at new Grade An office complex seems generated by occupiers relocating from older CBD buildings. This flight to quality might underpin greater vacancies in the alternate industry that could bring about erosion of rental expansion as property managers lower rents to fill up such rooms, the report clarifies.
According to a February research review by Morgan Stanley, Singapore Grade A workplace rental fees are expected to remain secure in 2025, even as the office market sees healthy take-up amongst new developments.
Previously this month, Keppel South Central, a 33-storey business tower in Tanjong Pagar, obtained its short-term occupation permit. In a Feb 10 statement, Keppel announced almost 50% of the office and retail space at the project was dedicated or being proactively discussed.
An anchor occupant has actually additionally been guaranteed for the establishment, that is claimed to be Manulife, Morgan Stanley’s statement adds.
In spite of the resilient take-up, Morgan Stanley expects office market rental fees to stay stable in 2025. The company is maintaining its Grade A workplace rental forecast unmodified at $12 psf monthly for this year, identical to the year just before.
