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The supply of office space in Singapore’s secondary market are expected to climb as tenants with expiring leases could relocate to newly completed office buildings, according to Cushman & Wakefield.
Based on the consultancy’s projections, the supply of secondary office space could reach about 1.13 million sq ft in 2015 and 2016. Of this, around 680,000 sq ft could re-enter the market this year, with 32 percent coming from Raffles Place and Marina Bay, while Shenton Way/Tanjong Pagar could contribute nearly 50 percent.
Come 2016, another 450,000 sq ft of previously-occupied office space could become available, with the majority located in Shenton and Marina Bay.
Cushman & Wakefield’s Research Director Christine Li warned the inventory of secondary office space in 2015 could be one of the highest levels in Singapore over the past few years, because its stock usually ranges from 300,000 to 500,000 sq ft annually.
Nevertheless, the higher supply of secondary office space will likely be taken up by other tenants given that demand for office space has exceeded supply for three straight years since 2012, she explained. For instance, net absorption in 2014 reached 770,000 sq ft, while net supply was only 700,000 sq ft.
Additionally, the anticipated increase in secondary office space could be the consequence of robust leasing demand for newly completed office buildings, as tenants are attracted to new buildings with better specifications.
“Going forward, as more of such secondary space becomes available in the market, we could see more ‘flight to quality’ movement by tenants who were previously in the suburbs and priced out of the CBD, Li added.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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