Singapore office rents fall in 3Q2023 on weaker demand: JLL
Tay Huey Ying, JLL Singapore’s head of study and consultancy, concords, adding that workplace rental improvement became more prevalent this previous quarter. “Our evaluation shows that greater than 15 properties regulated reduced hires in 3Q2023 than in 2Q2023, which dragged down the common rents for CBD Level An area for the very first time since they reversed in 2Q2021.”
She prepares for downward pressure on workplace rental fees to heighten, with hires correcting even more in the coming months in the middle of the existing macroeconomic environment and also arriving workplace supply. “Opposing the backdrop of an increase of coming undertakings fighting for a very little pool of renters, the short-term overrun of office might become more noticable,” she adds.
Singapore office rents declined in 3Q2023, according to data documented by JLL in a Sept 25 news release. The consultancy adds that it marks the very first quarterly downturn adhering to 9 constant quarters of office rental development in the city-state.
JLL’s analysis presents that gross effective lease for Level A workplace in the CBD dropped 0.3% q-o-q to around $11.29 psf each month in 3Q2023, below $11.32 psf monthly in 2Q2023.
He connects the lower rentals to much more supply from office space stock being returned to sale “at a raising speed” as more occupants right-size upon lease renewal to manage prices.
The decrease originates from continuous economic pressures, says Andrew Tangye, head of office space leasing and advisory for JLL Singapore. “The unsure near-term outlook coming from a mixture of slowing down economic growth, geopolitical tensions and increasing prices have remained to maintain tenants careful plus cost-conscious, causing weak workplace take-up,” he adds.
3 workplace projects are scheduled for finalization in the CBD over the following 24 months– IOI Central Blvd Towers (1.3 million sq ft) and Keppel South Central (0.6 million sq ft) in 2024, and the redeveloped Shaw Tower (0.4 million sq ft) in early 2025. JLL states that to date, over 1.5 million sq ft is estimated to be still uninvolved.
Past the short-term headwinds, the medium-term outlook for Singapore’s Grade A CBD office renting out market stays rich, JLL says. Need will certainly be upheld by Singapore’s burgeoning reputation as an international center, while the supply of office in the CBD will certainly stay constrained by a lack of greenfield sites together with URA’s focus on adding more live and play places downtown.