Singapore saw CBD office rents ease by 0.8 percent quarter-on-quarter to SGD8.80 per sq ft. (psf) per month in Q2 2017, a moderate decline from the 1.2 percent drop registered in the previous quarter, revealed an Edmund Tie & Company report.
The report noted that while the moderation of CBD rents indicates that the “office market is on track of bottoming out, they remain under pressure from the available space and moderate growth of the business services and finance sectors”.
According to the Ministry of Trade and Industry, the finance and business services sectors marginally expanded by 0.1 percent and 0.3 percent respectively year-on-year.
Grade B office rents in Shenton Way, Robinson Road, Cecil Street, Anson Road and Tanjong Pagar registered the highest decline – at 1.6 percent quarter-on-quarter – due to the “flight to quality”.
“Rents for premium and Grade A offices faced less pressure to decline further, as more of such spaces were taken up,” said Edmund Tie & Company.
The asking rents of smaller office units, on the other hand, held up very well. Smaller units or those below 6,000 sq ft. at Asia Square Tower 1 in Marina Bay, for instance, have an asking rent of between SGD9.80 and SGD14.00 psf per month, depending on the unit’s orientation and floor level.
With landlords quite flexible towards MNCs willing to occupy bigger floor area, the Marina Bay area saw gross office rents correct by 0.5 percent quarter-on-quarter to SGD10.53 psf per month in Q2 2017. Grade A office rents in Raffles Place also dipped by 0.5 percent quarter-on-quarter to SGD9.60 psf per month, on the back of 97.4 percent occupancy.
Meanwhile, office rents in decentralised regions, including Jurong Gateway, one-north/ Buona Vista, Harbourfront/ Alexandra, Novena and Tampines Financial Park held firm from the previous period since their occupancy was well supported.
Overall, Edmund Tie & Company believes that the outlook of the office market has “improved despite a pipeline supply of 2.2 million sq ft. NLA of CBD office space coming into the market in the second half of 2017”.
“More tenants are progressively committing to the upcoming supply and the improvement of global economic fundamentals is likely to spur further growth in demand,” it said.