Office rents up 2.4% in 2Q2022 on return-to-office momentum
Office rental fees in the Central region grew by 2.4% q-o-q in the second quarter, according to data published by URA on July 22. This is greater than the 1.6% rise recorded in the previous quarter and also views a 3rd consecutive quarter of growth.
Lam Chern Woon, head of research study as well as consulting at Edmund Tie, emphasize that noteworthy leasing task in 2Q2022 consists of Amazon.com’s reported take-up of 369,000 sq ft of area at the upcoming IOI Central Boulevard Towers and Blackstone’s relocation from Tower 2 to Tower 1 at Marina Bay Financial Centre, increasing its office footprint. The upcoming Guoco Midtown development also gained grip in leasing undertaking throughout the quarter, with lessees like ConocoPhillips and Swiss Re coming on board.
Leonard Tay, head of research study at Knight Frank Singapore, thinks that workplace leas will certainly hold firm despite a feasible economic downturn, backed by necessity driven by the “flight to safety” to Singapore by special affluent, corporates and MNCs. Knight Frank keeps a projection of 3% to 5% growth in leas for the entire of 2022.
However, she expects full-year success for CBD Grade A gross reliable rental fees can still double the 4.3% clocked in 2021, considered that they have actually already increased by 5% in the first part of the year.
“This positive take-up was likely helped by variation task, as well as new sets up in the legal area and also non-bank financial institutions,” mentions Tricia Song, CBRE head of research, Singapore and Southeast Asia. Song includes there was also a reduction of 473,612 sq ft in office supply, likely due to the removal of AXA Tower as it began demolition works, which further sustained lower vacancy prices.
The stronger performance was underpinned by Singapore additionally easing office constraints, with 100% of staff members enabled to return to the workplace as April 26.
Catherin He, head of research study, Singapore at Colliers, indicates that the rental growth was broad-based, with mean leas of both Category 1 and also Group 2 office spaces increasing q-o-q by 0.9% as well as 4% specifically. Based upon a basket of office complex tracked by Colliers Research study, rental fees of the Core CBD Premium & Grade A segment increased by 1.8% from the coming before quarter to $11.10 psf monthly.
The islandwide workplace vacancy price decreased by 0.8 percent points to 12%, driven by favorable net absorption of 258,334 sq ft in 2Q2022. This notes a turnaround after 5 consecutive quarters of negative net absorption.
Looking in advance, while the return-to-office momentum will continue propelling the office leasing market, there are signs that international economic headwinds are starting to affect some tenants’ real estate choices, which might temper workplace interest in 2H2022, says Tay Huey Ying, head of research study as well as consultancy, Singapore at JLL.