Singapore office rents see subdued growth in 1Q2023: JLL

Grade A office rents in Singapore’s CBD area recorded a marginal growth of 1.0% for the 1st quarter of 2023; q-o-q growth slowed for the second consecutive quarter. This development can be attributed to macroeconomic uncertainties which dampened demand for office space causing large occupiers to prioritise efficiency and press the pause on relocation plans.Despite the cautious mood, the tight supply of Grade A office space saw some occupiers exploiting the opportunity to upgrade to better office spaces. Some new office spaces such as Guoco Midtown and IOI Central Boulevard Towers have been partially pre-committed by tenants while Labrador Tower has been 25% pre-committed one year prior to its completion. Tenants include Prudential, who reportedly took up 150,000 sq ft at the latter.JLL Singapore’s head of office leasing and advisory, Andrew Tangye, predicts that rental growth will accelerate again post-2024, underpinned by a sharp dip in new completions and a return in demand. With rent growth currently taking a pause, now is the best window for occupiers, especially large space users, to lock in spaces in quality new office buildings.

Grade A office rentals in Singapore’s CBD area showed modest growth of 1.0% in the first quarter of 2023; a slower growth rate than the preceding quarter. This slight drop in rental growth can be attributed to macroeconomic uncertainties that have dampened demand for office space as large occupiers focus on efficiency and postpone their relocation plans.

Despite this cautious mood, the tight supply of Grade A office spaces has seen some companies seize the opportunity to upgrade. Guoco Midtown and IOI Central Boulevard Towers have both secured tenants while 25% of the upcoming Labrador Tower has already been pre-committed, with Prudential taking up 150,000 sq ft.

JLL Singapore’s head of research and consultancy, Tay Huey Ying, believes demand for office space will remain somewhat muted due to backfilling of spaces vacated by relocating occupiers taking longer than usual. She adds that such circumstances will likely keep rent growth modest for the rest of the year.

Andrew Tangye, JLL Singapore’s head of office leasing and advisory, suggests that companies make the most of rental growth taking a pause by locking in quality office spaces in new buildings. He is optimistic that rental growth will accelerate in post-2024 when completions dip and demand increases.