Singapore office rents fall in 3Q2023 on weaker demand: JLL
JLL’s research study presents that gross efficient lease for Grade An office in the CBD dropped 0.3% q-o-q to around $11.29 psf per month in 3Q2023, below $11.32 psf monthly in 2Q2023.
Beyond the short-term headwinds, the medium-term outlook for Singapore’s Grade A CBD office renting market continues to be brilliant, JLL opines. Need will be upheld by Singapore’s growing reputation as an international hub, while the supply of office in the CBD will certainly continue to be constricted by a lack of greenfield sites together with URA’s emphasis on injecting even more live and play places downtown.
She prepares for descending strain on workplace leas to heighten, with hires fixing further in the coming months amid the present macroeconomic atmosphere as well as arriving workplace supply. “Against the backdrop of an increase of upcoming undertakings competing for a small pool of renters, the temporary balance of office might become more obvious,” she includes.
He connects the lower leas to more supply from workplace stock being returned to sale “at a raising rate” as even more occupiers right-size upon rent renewal to take care of costs.
Tay Huey Ying, JLL Singapore’s head of research and consultancy, recognizes, adding that office rent correction ended up being extra widespread this past quarter. “Our evaluation reveals that greater than 15 investments regulated reduced hires in 3Q2023 than in 2Q2023, which dragged down the average rents for CBD Grade An area for the very first time ever since they shifted in 2Q2021.”
Three office projects are arranged for conclusion in the CBD over the following 24 months– IOI Central Blvd 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 early 2025. JLL states that to date, over 1.5 million sq ft is estimated to be still uncommitted.
The decline originates from ongoing economic pressures, states Andrew Tangye, head of workplace leasing and advisory for JLL Singapore. “The unclear near-term forecast originating from a mix of slowing down financial progress, geopolitical tensions and climbing prices have actually continued to maintain occupants careful and even cost-conscious, resulting in weak office space take-up,” he includes.
Singapore business office rental fees dropped in 3Q2023, according to data reported by JLL in a Sept 25 announcement. The consultancy adds that it observes the very first quarterly downturn following 9 constant quarters of office space rental development in the city-state.