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With prime office rents within the central business district (CBD) close to bottoming out by year end, Cushman & Wakefield expects some firms to relocate to cheaper areas next year, reported The Straits Times.
The property consultancy expects the gap in rents between Grade A office space in the CBD and suburban space to expand from 75 percent in Q1 2017 to 85 percent in 2018 and 94 percent in 2019.
“Once (these) rents return to growth in 2018, we could see decentralisation activities picking up pace,” said Cushman & Wakefield research director Christine Li.
Li revealed that monthly rents for Grade A offices in the CBD have been dropping since hitting its peak in Q1 2015, when they stood at over S$10 per sq ft (psf).
It continued on a downward trend in Q1 2017, declining by almost 1.9 percent from Q4 2016 to S$8.47 psf per month.
Monthly rent for suburban space, on the other hand, slid by around one percent to S$4.84 psf in Q1 2017.
While monthly prime office rents in the CBD are expected to fall further this year, Cushman & Wakefield forecast rents to increase to S$8.86 psf by end-2018 and S$9.60 psf in 2019.
This comes as the supply of new office buildings is expected to be limited from next year to 2020 – at less than one million sq ft of additional space in each of those years, explained the consultancy.
Set to be ready in 2018, Robinson Tower and Frasers Tower – both in Shenton Way – are expected to add a combined 823,000 sq ft to the CBD.
This article was edited by Denise Djong.
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