Office rents plateau in 3Q2024 as CBD vacancy rate climbs for second consecutive quarter: JLL
The pushback in Shaw Tower’s completion from 2025 to 2026 will further intensify scarcity. “Occupiers looking to expand or relocate in 2025 only have one brand-new building to select from: Keppel South Central (0.6 million sq ft) in the Shenton Way and Tanjong Pagar sub-market. This restricted supply might shift industry dynamics back in landlords’ favour,” Tangye says.
Nevertheless, the global economic downturn and the recurring hold-up in United States rates of interest cuts have actually influenced interest. Andrew Tangye, head of workplace leasing and advisory at JLL Singapore, indicates that net take-up of office has decreased as firms in Singapore grapple with climbing operating expense and exercise caution involving capital investment. Furthermore, workplace optimisation has actually led to some tenants decreasing their office footprint upon lease expiry.
Dr Chua additionally anticipates workplace rent out growth to “stay modest” through 2024, in front of a more strong recuperation in 2025 because of improved global financial conditions backed by lower rate of interest and business adjusting to brand-new work models and development approaches.
Tangye anticipates entire CBD vacancy prices to continue to be increased over the next few quarters as inhabitants require time to move into their new offices. Nevertheless, the actual physical availability of stock in some key workplace clusters stays minimal.
Gross effective rental payment for CBD Quality An offices in 3Q2024 stayed unmodified at $11.50 psf per month (pm) in 3Q2024, according to data from JLL published on Sept 23. This follows a 0.7% q-o-q development in 2Q2024, a slowdown from the 1.4% q-o-q growth in 1Q2024.
Dr Chua Yang Liang, head of study and consultancy for JLL Southeast Asia, highlights that minimal and mid-sized occupiers in development industries including financial companies, professional services, and emerging tech sectors have actually primarily driven office space demand over the past one year.
The atmosphere provides chances for occupiers wanting to update to superior units in high-grade structures, says Tangye. “For example, a significant section of Meta’s previous area at South Beach Tower has actually been re-let or is presently in enhanced settlements,” he adds. The room has actually attracted attraction from occurring occupants in the building in addition to lessees relocating from many others CBD properties.
The rental development plateau coincides with a second successive quarter of rising openings prices for Quality A workplaces in the CBD, that got to 8.3% q-o-q in 3Q2024. This boost is mainly as a result of the current finalization of the IOI Central Blvd Towers (IOICBT). JLL details that tenants are coming to be ever more resistant to lease hikes amid this uptick in job. Ignoring the IOICBT, the CBD Grade An openings rate would have remained relatively tight, akin to the post-pandemic low of 5.3% in 1Q2024.
He includes that the recent state judgment to not award the Jurong Lake District Master Developer site and place the location back on the reserve selection has actually brought about a “much more constricted outlook” for new workplace supply across Singapore. If this trend continues, it might bring about tight office space supply situations in the medium term, he includes.
