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In Q2 2021, the occupancy rate in the CBD dropped by 0.7% points quarter-on-quarter.
Singapore’s office sector saw overall net absorption improve to 649,000 sq ft in Q2 2021 from 185,000 sq ft in Q1 2021, revealed an Edmund Tie report.
The improvement comes on the back of the decentralisation trend, as more companies prefer spaces situated outside the Central Business District (CBD).
CBD occupancy rate dipped 0.7% points quarter-on-quarter in Q2 2021, due to increased restrictions ad companies reviewing their business operations needs amid the COVID-19 pandemic.
“The recent Phase 3 (Heightened Alert) curbs have resulted in working-from-home being the default arrangement in Singapore, resulting in thinner crowds at hot office spots,” said Lam Chern Woon, Senior Director of Research and Consulting at Edmund Tie.
“As companies re-evaluate their office spaces and the economy gradually recovers, the trend of flexible workspaces is expected to continue, as seen from the bullish expansion plans of the co-working operator JustCo,” he added.
JustCo announced in March plans to open an office at Asia Green in Tampines. In June, the company also shared that they will manage and occupy two floors at The Metropolis in Buona Vista, which is the only Grade-A office within the One-North precinct.
Meanwhile, the report noted that monthly rents within various subzones of the office sector remained steady or marginally decline in Q2 2021.
The CBD and non-CBD subzones witnessed a continued emphasis on a flight to quality office spaces, while tenants took advantage of the present climate to negotiate better office rental rates.
“Tenants are taking advantage of the COVID-19 situation to shift towards quality buildings, such as providing higher quality ventilation systems to create a safer and healthier work environment,” said Lam.
Looking ahead, Edmund Tie expects office rents in Singapore to bottom out by the end of the year.
Over at the industrial sector, prices and rents for industrial space are expected to remain stable this year “with the higher-than-average supply pipeline balancing off with improving demand”.
Edmund Tie noted that the shift of food and beverage (F&B) sales online, which was triggered by the COVID-19 pandemic, drove the growth of cloud kitchens.
“Cloud kitchens are an emerging niche market segment with significant growth opportunities,” it said.
“This is evidenced by Singapore-based Select Group’s announcement in March 2021 of their plans to invest $10 million to open 20 cloud kitchens locally over the next five years.”
Edmund Tie also sees “potential upside for retail rents in the fringe/suburban areas, given the continued strong retail performance and the tight supply pipeline”.
“More retailers are showing a stronger preference in locating their shops at the fringe/suburban subzone due to the increased footfall primarily attributed to the default work-from-home arrangements,” it said.
The report pointed that the occupancy rate in the fringe/suburban areas improved 0.8% points to 93.3% in Q1 2021.
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Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: cheryl@propertyguru.com.sg