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Grade A office rents within Singapore’s central business district (CBD) are expected to increase by eight percent this year and five percent next year.
Grade A office rents within Singapore’s central business district (CBD) are expected to increase by eight percent this year and five percent next year, on the back of high-pre-commitments and tight supply, according to a Colliers International report.
It noted that vacancies will remain tight in 2019 to 2021 as new supply is expected to average 614,000 sq feet per annum during this period, or two percent of s
Grade A office rents within Singapore’s central business district (CBD) are expected to increase by eight percent this year and five percent next year, on the back of high-pre-commitments and tight supply, according to a Colliers International report.
It noted that vacancies will remain tight in 2019 to 2021 as new supply is expected to average 614,000 sq feet per annum during this period, or two percent of stock versus five percent over the past five years.
Rents in Shenton Way/Tanjong Pagar micro-market could grow at the fastest on a three- and five-year horizon, driven by rejuvenation and redevelopment within the area.
Colliers said new buildings such as UIC Building, Guoco Tower and Frasers Tower completed in 2016 to 2018 raised the rent and image of the micro-market. Redevelopments like CPF Building (to be named ASB Tower) and Afro-Asia Building are also expected to raise rents further in 2020 once they are completed.
It added that rental growth within this micro-market could be further supported by withdrawal of existing stock for redevelopment as landlords adopt the URA incentive scheme.
Aside from the Shenton Way/Tanjong Pagar micro-market, the real estate services firm also assessed Singapore’s five other CBD micro-markets – namely, Raffles Place/New Downtown (Premium), Raffles Place/New Downtown (Grade A), Beach Road/Bugis, City Hall, and Orchard – considering factors such as availability of office stock, existing industry clusters, accessibility and rents.
“Given Singapore’s status as a global financial hub, it is perhaps unsurprising that the financial services sector occupies a lion’s share (42 percent) of total office space in the CBD,” it said.
The other relatively large space users are the professional services and technology, media and telecoms (TMT) sectors at 15 percent and 12 percent, respectively. Resources, energy and commodities companies accounted for nine percent, while consumer, and flexible workspace companies make up five percent and four percent, respectively.
Colliers noted that the TMT and flexible workspace sectors have been growing, accounting for most of the net absorption in 2018 and 2019 year-to-date. The flexible workspace stock, for instance, has more than tripled since 2015.
“Occupier demands have evolved from the sole considerations of location, price/rent and basic amenities. Other factors that are becoming more important include flexibility, space efficiency, wellness and lifestyle amenities, and tenant experience,” said Rick Thomas, head of occupier services for Singapore at Colliers International.
With this, he advised landlords “to ensure that their portfolio remains relevant while occupiers should reassess their needs and explore alternative lease options early given the limited prime contiguous space, as well as considering flex and core strategies”.
tock versus five percent over the past five years.
Rents in Shenton Way/Tanjong Pagar micro-market could grow at the fastest on a three- and five-year horizon, driven by rejuvenation and redevelopment within the area.
Colliers said new buildings such as UIC Building, Guoco Tower and Frasers Tower completed in 2016 to 2018 raised the rent and image of the micro-market. Redevelopments like CPF Building (to be named ASB Tower) and Afro-Asia Building are also expected to raise rents further in 2020 once they are completed.
It added that rental growth within this micro-market could be further supported by withdrawal of existing stock for redevelopment as landlords adopt the URA incentive scheme.
Aside from the Shenton Way/Tanjong Pagar micro-market, the real estate services firm also assessed Singapore’s five other CBD micro-markets – namely, Raffles Place/New Downtown (Premium), Raffles Place/New Downtown (Grade A), Beach Road/Bugis, City Hall, and Orchard – considering factors such as availability of office stock, existing industry clusters, accessibility and rents.
“Given Singapore’s status as a global financial hub, it is perhaps unsurprising that the financial services sector occupies a lion’s share (42 percent) of total office space in the CBD,” it said.
The other relatively large space users are the professional services and technology, media and telecoms (TMT) sectors at 15 percent and 12 percent, respectively. Resources, energy and commodities companies accounted for nine percent, while consumer, and flexible workspace companies make up five percent and four percent, respectively.
Colliers noted that the TMT and flexible workspace sectors have been growing, accounting for most of the net absorption in 2018 and 2019 year-to-date. The flexible workspace stock, for instance, has more than tripled since 2015.
“Occupier demands have evolved from the sole considerations of location, price/rent and basic amenities. Other factors that are becoming more important include flexibility, space efficiency, wellness and lifestyle amenities, and tenant experience,” said Rick Thomas, head of occupier services for Singapore at Colliers International.
With this, he advised landlords “to ensure that their portfolio remains relevant while occupiers should reassess their needs and explore alternative lease options early given the limited prime contiguous space, as well as considering flex and core strategies”.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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