Office rents up 2.4% in 2Q2022 on return-to-office momentum
Workplace rents in the Main area expanded by 2.4% q-o-q in the second quarter, according to data launched by URA on July 22. This is greater than the 1.6% increase reported in the previous quarter and also views a third consecutive quarter of expansion.
Catherin He, head of study, Singapore at Colliers, indicates that the rental growth was broad-based, with average rental fees of both Category 1 and also Classification 2 office raising q-o-q by 0.9% and 4% respectively. Based on a basket of office complex tracked by Colliers Research, leas of the Core CBD Premium & Grade A sector rose by 1.8% from the preceding quarter to $11.10 psf monthly.
Looking ahead, while the return-to-office momentum will certainly carry on thrusting the office leasing market, there are signs that worldwide financial headwinds are opening to influence some inhabitants’ property choices, which could temper office need in 2H2022, claims Tay Huey Ying, head of research study as well as consultancy, Singapore at JLL.
Nevertheless, she expects full-year development for CBD Grade A gross effective leas can still multiply the 4.3% clocked in 2021, given that they have already climbed by 5% in the initial half of the year.
The more powerful performance was underpinned by Singapore even more easing workplace constraints, with 100% of workers enabled to go back to the workplace as April 26.
The islandwide office openings price lowered by 0.8 percentage indicate 12%, driven by favorable net absorption of 258,334 sq ft in 2Q2022. This marks a reversal after 5 consecutive quarters of adverse net absorption.
Leonard Tay, head of research at Knight Frank Singapore, believes that workplace rents will certainly hold firm despite a possible economic crisis, backed by demand driven by the “flight to safety” to Singapore by special affluent, corporates and also MNCs. Knight Frank preserves a projection of 3% to 5% expansion in leas for the entire of 2022.
“This positive take-up was likely contributed by displacement task, in addition to brand-new sets up in the lawful sector as well as non-bank financial institutions,” mentions Tricia Song, CBRE head of research study, Singapore and also Southeast Asia. Song adds there was also a loss of 473,612 sq ft in workplace supply, likely as a result of the removal of AXA Tower as it started demolition jobs, which better sustained reduced vacancy rates.
Lam Chern Woon, head of research study and consulting at Edmund Tie, highlights that remarkable leasing activity in 2Q2022 consists of Amazon’s reported take-up of 369,000 sq ft of area at the upcoming IOI Central Blvd Towers and also Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, doubling its office presence. The upcoming Guoco Midtown development likewise gained grip in leasing activity during the quarter, with tenants like ConocoPhillips and also Swiss Re coming on board.