Prime office rents expected to rise

SINGAPORE - Prime office rents are expected to rise this year thanks to improving economic sentiments, Cushman & Wakefield has said in its latest report.

The leasing market was active in the first quarter of this year with the number of enquiries in the market at a generally healthy level, the real estate firm said.

With the limited supply of prime grade A office space in the market, the average grade A overall rent was marginally higher at $9.90 per square foot per month (psf/mo) in the first quarter of 2014, up by 5.5 per cent from the previous quarter. Compared to the same quarter a year ago, the average grade A effective monthly rent was up by a firm 10.1 per cent.

The vacancy rate for grade A offices in the five submarkets declined marginally by 0.2 percentage point to 4.0 per cent in first quarter 2014. The vacancy rate for Raffles Place was slightly lower at 3.1 per cent as at first quarter 2014, compared to the 4.0 per cent in fourth quarter 2013. However City Hall saw a slight uptick in the vacancy rate at 1.2 per cent in first quarter 2014, compared to 0.5 per cent a quarter ago. The vacancy rates for Marina Bay, Shenton Way and Orchard were the same as that in the previous quarter.

Accordingly, the market saw less pressure on landlords to offer more attractive concession packages in order to draw new tenants to their buildings. Nevertheless, tenants will remain cost-conscious and with space take-up driven by expense savings or other critical business requirements.

The various submarkets within the CBD area saw further rental increase in first quarter 2014 compared to a quarter ago. The highest increase was noted in Raffles Place where the average monthly rent rose by 9.7 per cent and this was followed by rents in Marina Bay, which recorded an increase of 9.3 per cent compared to fourth quarter 2013.

The average effective rents for newer buildings in Marina Bay ranged from S$13 to S$14 psf/mo, due to the limited stock of prime office space within the location.

Toby Dodd, Country Head, Cushman & Wakefield, Singapore, said: "Firm demand conditions coupled with limited new supply of prime office space have led to upward movement in rents this quarter, which is the fourth consecutive quarterly increase".

Cushman & Wakefield says that it expects prime office rents in the CBD area to rise over the next few quarters, as there will be a moderate level of new supply and positive economic sentiments this year.

Source: AsiaOne 7th April 2014

PROPERTY LAUNCHES & INVESTMENTS

Property Launches & Investments

Prime office rents expected to rise

Comments

Leave your comment