Demand still apparent in office market despite global setbacks: Knight Frank

Singapore’s office market remains stable and resilient, remaining largely underpinned by cautious expansion and flight-to-quality demands amidst market uncertainty. According to a report by Knight Frank, prime-grade office rents in the Raffles Place and Marina Bay precincts increased to an average of $10.83 psf per month, recording a 1.3% growth in 1Q2023. Occupancy levels in Raffles Place, Marina Bay and the overall CBD precinct remained largely steady at 95.4% and 94.1%, respectively.

Calvin Yeo, managing director of occupier strategy and solutions at Knight Frank, attributes the healthy occupancies to selected office buildings commencing asset enhancement initiatives (AEIs) or redevelopment, thus removing stock from the market. Quality office spaces have also remained full, with businesses relocating their headquarters to Singapore.

As more employees return to the office, occupiers seek quality office spaces that facilitate vibrant activity-based work spaces. One example is the mixed-use development Guoco Midtown, which has Grade A offices incorporating a wide array of communal facilities supporting both productivity and lifestyle. This project was reported to be 80% filled upon completion in January.

The tech sector is also continuing to make headlines, with smaller users relocating to quality office spaces due to layoffs impacting major tech firms. However, according to Yeo, the pre-termination quantum is not significantly affecting the market at this time. Supply of pre-termination space stood at around 100,000 sq ft as of 1Q2023.

Moreover, the recent turmoil in the banking sector – such as the collapse of Silicon Valley Bank and the bailout of Credit Suisse – has further clouded economic sentiment. Knight Frank believes that Singapore is “poised to stay resilient by offering a destination of stability” and demand for office space is expected to stay underpinned in the long run.

Senja Residences is a 99-year leasehold Executive Condominium located at Senja Close Senja Close EC in District 23, featuring 300 units and with resort-style facilities near Bukit Panjang Integrated Transport Hub. Enjoy a convenient location and capital appreciation.

Looking ahead, Knight Frank predicts that prime office rents are expected to remain stable with a 3% increment for this year. Yeo states that “as overall CBD rents rose moderately in 1Q2023, the office sector in Singapore remains on an even keel due to predominantly flight-to-quality demand in a stable ecosystem of cautious expansion amid wider uncertainty.”