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Demand for office space in Singapore increased in Q3 2014 compared to the previous quarter on the back of strong leasing activity in the city’s outskirts, according to a DTZ report.
Islandwide net absorption rose by 43 percent to 443,000 sq ft on a quarterly basis, while occupancy rate increased by 0.8 percentage point to 95.8 percent as there were completions in Q3 2014.
“The strong leasing activities in the quarter were underpinned by broad-based expansions of all sectors including commodities, finance, insurance, pharmaceuticals, professional services and technology, media and telecommunications (TMT) firms,” said Cheng Siow Ying, Executive Director for Business Space at DTZ.
As a result, total net absorption reached 1.1 million sq ft for January to September versus 0.9 million sq ft over the same period last year.
Moving forward, only about 826,000 sq ft of office space are expected to be ready by next year, forecasted Lee Lay Keng, Regional Research Head for Southeast Asia at DTZ.
“After accounting for the removal of office stock at Equity Plaza (258,000 sq ft) and other buildings such as Keypoint (268,000 sq ft) and 2HR (141,000 sq ft) for redevelopment, net supply next year will be even lower at an estimated 159,000 sq ft,” she said.
Despite the lower supply, nearly 1 million sq ft of office space could become available in 2015, when tenants transfer out of their existing premises. In addition, there are 550,000 sq ft of un-occupied shadow space, while another 133,000 sq ft shall be released next year, noted Lee.
“This will mitigate the shortfall in new supply next year. CBD office rents are therefore projected to continue their upward trajectory next year albeit at a slightly slower pace, after an expected growth of close to 15 percent for the whole of 2014,” she added.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this and other stories, email nikki@propertyguru.com.sg
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