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The average overall monthly rent of Grade A office space in Singapore inched up by 1.3 percent to S$10.43 per sq ft in the first quarter (Q1) of 2015 compared to the previous quarter, according to a report from Cushman and Wakefield (C&W).
Specifically, Raffles Place posted the biggest rental increase of 5.2 percent to S$10.92 per sq ft as premium prices are fetched by the new quality space in CapitaGreen.
Rents at City Hall/Marina Centre rose by 2.4 percent to S$9.73 per sq ft, while that in Marina Bay and Shenton Way remained the same at $13.22 per sq ft and S$8.51 per sq ft, respectively.
However, the only submarket that recorded a slight drop is Orchard Road with a 1.4 percent decline, bringing prices down to S$9.78 per sq ft.
Meanwhile, overall vacancy rate for Grade A offices in the five main submarkets slid by 0.3 percentage point to 3.9 percent in Q1 2015 on a quarterly basis.
In particular, vacancy rate at Raffles Place declined significantly from 6.3 percent in Q4 2014 to 4.7 percent during the quarter under review due to the continued leasing activities at the newly completed CapitaGreen.
Vacancy rate at City Hall/Marina Centre was unchanged at 1.3 percent, but the remaining three submarkets saw a slight gain in vacancy rates in light of the uncertain global economy and prevailing labour crunch.
In Marina Bay, the vacancy rate rose to 4.6 percent from 4.4 percent. At Shenton Way, it increased to 4.2 percent from 3.6 percent, while that in Orchard Road edged up to 3.0 percent from 1.7 percent previously.
“Given that the tight supply situation will persist throughout 2015 and the early part of 2016, we expect Grade A rents to continue their steady rise,” said the consultancy.
The consultancy also forecasted the city-state’s office leasing momentum to increase further in Q2 2015, as tenants from the legal, technology as well as finance & insurance sectors continue to seek quality office space in the core CBD.
Furthermore, Cushman’s research shows that about 1.1 million sq ft of secondary and shadow space will become available this year due to relocations or downsizing.
“These spaces include areas in prime developments such as Marina Bay Financial Centre, Asia Square and One Raffles Quay, which could pose competition to the new supply coming into the market next year,” it added.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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