Singapore office rents fall in 3Q2023 on weaker demand: JLL
JLL’s analysis shows that gross reliable lease for Grade An office in the CBD fell 0.3% q-o-q to an average of $11.29 psf per month in 3Q2023, below $11.32 psf monthly in 2Q2023.
Beyond the short-term headwinds, the medium-term overview for Singapore’s Grade A CBD office space leasing market remains brilliant, JLL believes. Demand will certainly be upheld by Singapore’s expanding credibility as a global center, while the supply of office space in the CBD will remain constrained by a lack of greenfield locations in addition to URA’s focus on injecting even more live and play places downtown.
Tay Huey Ying, JLL Singapore’s head of research study as well as consultancy, concurs, adding that office rent correction came to be a lot more extensive this past quarter. “Our study displays that greater than 15 properties commanded reduced hires in 3Q2023 than in 2Q2023, which dragged down the average rents for CBD Level A space for the very first time since they turned around in 2Q2021.”
Singapore business office leas dropped in 3Q2023, according to data reported by JLL in a Sept 25 news release. The consultancy includes that it observes the initial quarterly downtrend following nine consecutive quarters of office rental development in the city-state.
Three workplace projects are scheduled for conclusion in the CBD over the next 24 months– IOI Central Boulevard Towers (1.3 million sq ft) and also Keppel South Central (0.6 million sq ft) in 2024, and the redeveloped Shaw Tower (0.4 million sq ft) in very early 2025. JLL states that to date, over 1.5 million sq ft is approximated to be still uncommitted.
She prepares for downward strain on office leas to escalate, with rents correcting even more in the coming months in the middle of the present macroeconomic environment as well as incoming office supply. “Against the backdrop of an influx of future undertakings challenging for a small pool of renters, the temporary balance of office space might become more pronounced,” she includes.
He attributes the lower rents to much more supply from office space stock being actually gone back to the market “at a raising rate” as even more occupants right-size upon rent renewal to take care of expenses.
The decline originates from continuous economic pressures, says Andrew Tangye, head of workplace leasing and also advisory for JLL Singapore. “The unclear near-term overview originating from a mixture of slowing financial development, geopolitical tensions and increasing rates have continued to maintain occupants cautious and even cost-conscious, resulting in weak workplace take-up,” he adds.