Singapore office rents fall in 3Q2023 on weaker demand: JLL
Singapore business office rents declined in 3Q2023, according to data reported by JLL in a Sept 25 announcement. The consultancy adds that it denotes the first quarterly downtrend adhering to nine consecutive quarters of office space rental growth in the city-state.
She anticipates descending pressure on office rental fees to increase, with rents fixing even more in the coming months amidst the present macroeconomic environment and incoming workplace supply. “Against the backdrop of an increase of upcoming projects challenging for a very little pool of occupants, the short-term oversupply of office might become more noticable,” she includes.
Beyond the short-term headwinds, the medium-term outlook for Singapore’s Grade A CBD workplace leasing market stays bright, JLL believes. Interest will certainly be sustained by Singapore’s growing reputation as a global center, while the supply of workplace in the CBD will certainly remain constricted by a scarcity of greenfield locations in addition to URA’s emphasis on injecting even more live and play spaces downtown.
Three workplace jobs are scheduled for conclusion in the CBD over the following 24 months– IOI Central Blvd Towers (1.3 million sq ft) and 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 estimated to be still uncommitted.
The decrease comes from ongoing economic forces, states Andrew Tangye, head of office space leasing and advisory for JLL Singapore. “The unclear near-term forecast originating from a mixture of slowing economic growth, geopolitical stress and increasing rates have continued to maintain tenants careful plus cost-conscious, resulting in weak office take-up,” he adds.
He attributes the reduced hires to much more supply from office space stock being actually gone back to the marketplace “at an increasing pace” as more occupants right-size upon rent renewal to take care of expenses.
Tay Huey Ying, JLL Singapore’s head of research and also consultancy, acknowledges, putting in that workplace rent modification ended up being more extensive this previous quarter. “Our evaluation reveals that more than 15 investments regulated lesser rents in 3Q2023 than in 2Q2023, which grabbed down the average leas for CBD Grade An area for the very first time ever since they turned around in 2Q2021.”
JLL’s research study shows that gross effective rent for Level A workplace in the CBD slipped 0.3% q-o-q to around $11.29 psf per month in 3Q2023, below $11.32 psf each month in 2Q2023.