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Grade A office rents grew 14.9 percent in 2018, up 21 percent from the second quarter of 2017. Net absorption reached 1.59 million sq ft, while net supply stood at 1.51 million sq ft.
CBRE Research expects Grade A office rents to continue an upward trajectory from 2019 to 2022, albeit at a slower pace than the early part of the rental recovery cycle, reported Singapore Business Review.
“Prospects for the office market looks largely sanguine in the next couple of years; demand looks relatively stable while pipeline supply is moderating, all of which are positive indicators,” said CBRE.
Grade A office rents grew 14.9 percent in 2018, up 21 percent from the second quarter of 2017. Net absorption reached 1.59 million sq ft, while net supply stood at 1.51 million sq ft.
The co-working market’s size doubled to around 1.4 million sq ft from 700,000 sq ft in 2017. There have been facilities measuring 60,000 sq ft such as those of Justco, WeWork and Distrii, up from the average sizes of 5,000 to 10,000 sq ft in 2013.
By 2020, the co-working operators’ market size is forecasted to exceed 2.0 million sq ft. However, co-working spaces only make up 1.5 percent of the office market.
“However, with new co-working facilities growing larger and larger, there has been a distinct shift in focus by co-working players towards larger enterprises to fill up their spaces,” CBRE said.
Office supply is anticipated to reach 5.39 million sq ft, which is an annual average of 1.33 million sq ft and around 30 percent lower than the 1.90 million sq ft 10-year average.
The next wave will probably arrive by 2022, capping rental growth prospects in the moderate term.
Meanwhile, vacancy levels for Core Central Business District (CBD) or Grade A segments tightened to 5.1 percent from 6.2 percent. Occupiers are expected to broaden their location criteria in office requirements, resulting to a hike in leasing demand for Grade B/B+ offices.
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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