Singapore office rents fall in 3Q2023 on weaker demand: JLL
Singapore business office leas dropped in 3Q2023, according to data disclosed by JLL in a Sept 25 announcement. The consultancy includes that it observes the first quarterly downturn adhering to nine constant quarters of office rental growth in the city-state.
He connects the lesser rentals to more supply from office supply being actually returned to the marketplace “at an increasing speed” as more occupiers right-size upon rent renewal to take care of prices.
Tay Huey Ying, JLL Singapore’s head of research and consultancy, concords, including that workplace lease improvement became a lot more widespread this past quarter. “Our analysis displays that greater than 15 investments commanded lesser rents in 3Q2023 than in 2Q2023, which dragged down the standard rents for CBD Level A space for the first time ever since they turned around in 2Q2021.”
The decrease originates from continuous economic forces, claims Andrew Tangye, head of office space leasing and advisory for JLL Singapore. “The uncertain near-term outlook stemming from a combination of slowing economic growth, geopolitical tensions and increasing costs have actually remained to keep occupiers cautious and even cost-conscious, causing weaker office take-up,” he adds.
Beyond the short-term headwinds, the medium-term expectation for Singapore’s Grade A CBD office leasing market continues to be rich, JLL suggests. Need will certainly be upheld by Singapore’s growing credibility as an international center, while the supply of office space in the CBD will certainly remain constricted by a lack of greenfield locations together with URA’s emphasis on injecting even more live and play spots downtown.
She expects downward force on workplace rental fees to intensify, with rents fixing further in the coming months in the middle of the current macroeconomic setting as well as incoming workplace supply. “Against the backdrop of an increase of future ventures fighting for a very little pool of renters, the short-term oversupply of workplace could become a lot more obvious,” she adds.
Three office projects are scheduled for finalization in the CBD over the next 24 months– IOI Central Boulevard Towers (1.3 million sq ft) and Keppel South Central (0.6 million sq ft) in 2024, and also 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 unaffiliated.
JLL’s research study shows that gross efficient rental for Grade An office space in the CBD fell 0.3% q-o-q to approximately $11.29 psf monthly in 3Q2023, down from $11.32 psf per month in 2Q2023.