Office rents plateau in 3Q2024 as CBD vacancy rate climbs for second consecutive quarter: JLL
The environment gives possibilities for occupants seeking to upgrade to first-rate units in high-quality buildings, claims Tangye. “For instance, a substantial part of Meta’s former area at South Beach Tower has been re-let or is currently in advanced settlements,” he adds. The area has attracted interest from existing occupants in the structure in addition to lessees moving from other CBD buildings.
He includes that the recent state judgment to not honor the Jurong Lake District Master Developer site and place the location back on the reserve lineup has caused a “much more constricted outlook” for new office supply across Singapore. If this trend persists, it might cause tight office space supply situations in the medium term, he includes.
Gross effective lease for CBD Grade A workplaces in 3Q2024 continued to be unchanged at $11.50 psf monthly (pm) in 3Q2024, according to data from JLL published on Sept 23. This follows a 0.7% q-o-q development in 2Q2024, a downturn from the 1.4% q-o-q growth in 1Q2024.
Dr Chua even expects workplace lease expansion to “stay moderate” throughout 2024, in front of an extra sturdy healing in 2025 because of enhanced global financial problems backed by reduced rate of interest and firms adapting to brand-new work models and growth methods.
The rental development plateau accompanies a second succeeding quarter of rising openings prices for Grade A workplaces in the CBD, which reached 8.3% q-o-q in 3Q2024. This increase is greatly due to the latest completion of the IOI Central Blvd Towers (IOICBT). JLL notes that occupants are becoming more and more resisting to lease walkings amidst this uptick in openings. Leaving out the IOICBT, the CBD Grade An openings price might have remained reasonably tight, comparable to the post-pandemic low of 5.3% in 1Q2024.
The pushback in Shaw Tower’s completion from 2025 to 2026 will certainly further exacerbate deficiency. “Occupiers seeking to expand or move in 2025 just have one new establishment to choose from: Keppel South Central (0.6 million sq ft) in the Shenton Way and Tanjong Pagar sub-market. This limited supply could move market dynamics back in landlords’ favour,” Tangye says.
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Nonetheless, the global economic downturn and the ongoing hold-up in US rates of interest cutbacks have influenced demand. Andrew Tangye, head of office leasing and advisory at JLL Singapore, mentions that net take-up of workplace has decreased as firms in Singapore grapple with climbing operating expense and exercise caution involving capital investment. Additionally, work environment optimisation has resulted in some tenants minimizing their office space impact upon lease conclusion.
Tangye expects overall CBD vacancy prices to remain increased over the following couple of quarters as occupiers take some time to shift into their new office spaces. Nevertheless, the actual physical availability of supply in some key office clusters continues to be restricted.
Dr Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia, emphasize that little and mid-sized occupiers in growth industries like financial services, specialist solutions, and developing tech sectors have mainly driven office need over the past twelve month.
