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Some of the newer prime office developments in Singapore posted higher commitment levels as tenants take advantage of falling rents to relocate to bigger office spaces, a report by RHB revealed.
Pre-commitment leases at Guoco Tower, for instance, reportedly hit over 70 percent, with new tenants including IT and finance companies. Pre-commitment levels at Marina One, on the other hand, has already reached 35 percent.
“While the pickup in office leases is positive we note that most of the demand is shifting as tenants take advantage of falling office rents to sign up for bigger and efficient office spaces in newer developments,” said RHB analyst Vijay Natarajan.
The move to newer developments puts further pressure on older Grade A office building rents especially as leases entered into during the peak of 2013 to 2014 are due for renewals, he said.
With this, RHB expects office landlords to “counter the trend by undertaking more AEIs (asset enhancement initiatives) or an outright sale taking advantage of strong office building transactions,” he added.
Nikki De Guzman, Editor at CommercialGuru edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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