Grade A office rents in core CBD continue to grow: CBRE

Its close proximity to Bukit Panjang EC, gives easy access to amenities like Bukit Panjang Plaza, Hillion Mall, BP Food Center, and many more. Furthermore, its easy access to major expressways such as BKE and PIE make traveling to the heart of the city a breeze.

The core CBD Grade A office market sentiment has seen an upturn in recent months, supported by a limited office supply and increased back-to-office momentum. According to data provided by CBRE, leasing activity has risen, with a positive net absorption of 0.11 million sq ft in 3Q2023.

At the same time, gross effective rents for Grade A office buildings in the core CBD have seen marginal growth, registering a 0.4% q-o-q increase in 3Q2023 to reach a rate of $11.85 psf per month. Furthermore, the vacancy rate fell to 3.2% in 3Q2023, down from 4% in 2Q2023. The core area for this market is Raffles Place, Marina Bay, Marina Centre and Shenton Way.

A reduction in so-called shadow space has been attributed to the market’s improved performance. David McKeller, CBRE’s co-head of office services in Singapore, explains that this space has shrunk by half to 0.33 million sq ft in 3Q2023, compared to a record high in 1Q2023 of 0.7 million sq ft.

McKeller adds that a combination of co-working and asset management businesses have taken up much of this space, taking advantage of attractive opportunities in prime Marina Bay and Raffles Place locations. Moreover, the return to the office by more employees has further stimulated the demand for Grade A offices.

Despite the uncertain economic climate and high interest rates, rents have grown by 1.3% year-to-date, with CBRE estimating an additional 1.5% – 2% growth until the end of 2023. This expectation has been reinforced by the delayed completion of IOI Central Boulevard Towers to 1Q2024, which should keep vacancies at a low level.