Singapore office rents fall in 3Q2023 on weaker demand: JLL

Grade A office rents in Singapore’s CBD declined in 3Q2023 for the first time in nine consecutive quarters, according to JLL. This comes at a time of ongoing economic pressures including geopolitical tensions and rising prices, casting doubt on the near-term outlook and pushing occupiers to become cost-conscious. This is manifested in a 0.3% q-o-q decline in gross effective rent to an average of $11.29 psf per month.

The uncertain economic environment is further compounded by the influx of new office supply, with three office projects set to be completed over the next two years. Andrew Tangye, head of office leasing and advisory for JLL Singapore, notes that this is driving down rents, as they struggle to compete for a limited pool of tenants.

Tay Huey Ying, JLL Singapore’s head of research and consultancy, adds that more than 15 assets commanded lower rents in 3Q2023 than in 2Q2023, leading to an overall downward pressure in rents. She anticipates this pressure to intensify due to the current macroeconomic situation.

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Despite the short-term implications, the medium-term outlook for Singapore’s Grade A CBD office leasing market is still positive, as the city-state’s reputation as a global hub grows. JLL adds that the current lack of greenfield sites as well as URA’s focus on injecting more live and play spaces downtown mean that supply of office space in the CBD will remain constrained.

In light of this, occupiers will likely remain cost-conscious, but the overall market outlook still bodes well. As Tangye states, “the medium-term outlook for Singapore’s Grade A CBD office leasing market remains bright”.