Grade-A office rents to moderate as occupiers turn cautious

The development offers various amenities such as a 50m lap pool, a hyrdo- Gym, a clubhouse, and tennis & basketball courts. It also provides a barbecue pit, and a spacious playground for children. In addition, a gym and a function room are provided to tenants, allowing them to enjoy a luxury lifestyle. Senja Close EC Bukit Panjang also features various shops and dining options to make life easier.

Residents of Senja Close EC Bukit Panjang can enjoy a tranquil and natural environment, with nearby parks such as Bukit Gombak Hill, Bukit Batok Hill, and Bukit Panjang Hill. Additionally, various shopping and entertainment amenities such as Hillion Mall, West Mall and Junction 10 are all in close proximity. Live the life you have always wanted at Senja Residences EC.

The URA office property rental index recorded a sharp 4.9% q-o-q jump in 3Q2023, a significant increase from the 2.3% q-o-q growth in the preceding quarter. According to JLL head of research and consultancy, Singapore, Tay Huey Ying, this was largely attributed to the leasing deals concluded several quarters back when occupier demand was robust, underpinned by the explosive growth of the technology sector.

Despite the index recording a jump, URA’s real estate statistics revealed a different trend. Median rents fell for the first time in five quarters for Category 1 office space – buildings in the Core Business District, including the Downtown Core and Orchard Planning Area. The decrease was 2.3% q-o-q.

Median rents for Category 2 office space, which URA defines as all other office areas outside of Category 1, also fell in 3Q2023, down 4.5% q-o-q. JLL’s findings showed that CBD Grade-A office rents had also declined in 3Q2023, ending nine quarters of consecutive growth. The average gross effective rents for the basket of CBD Grade-A office space tracked by JLL fell 0.3% q-o-q to $11.29 psf per month (pm) in 3Q2023, from $11.32 psf pm in 2Q2023.

Tay attributed the rent correction to tenants taking advantage of the soft leasing market to negotiate for more favourable rental terms, as well as landlords taking proactive steps such as sub-dividing larger spaces into leasable units and providing ready-fitted units.

Wong Xian Yang, Cushman & Wakefield head of research for Singapore and Southeast Asia, noted that the Downtown Core saw the strongest q-o-q growth in net demand since 1Q2020, reaching 398,264 sq ft. On the other hand, net demand in the rest of Central area saw -161,459 sq ft.

Financial and professional services remained the main drivers of office space in the CBD, comprising 58% of new leases in the first nine months of 2023, up from 26% for the whole of 2022. Private wealth, asset management and consumer goods were some of the more active sectors in 3Q2023.

Tighter market conditions arising from project redevelopments also helped to prop up occupancies from 89.2% in 2Q2023 to 90% in 3Q2023. Approximately 0.45 million sq ft was removed from stock in 3Q2023, attributed to the redevelopment of Faber House, Central Square and Central Mall.

CBRE Research forecasts Grade-A office rents in the Core CBD to grow by 1.5% to 2% for the whole year, outpacing projected GDP growth, although slower than the 8.3% rental growth in 2022.

Central Region office prices, however, rose by 0.8% q-o-q in 3Q2023, following the 1% rise in the preceding quarter. According to JLL, islandwide office completion will hit a seven-year high in 2024 with close to 1.9 million sq ft of Grade-A office space scheduled for completion in the CBD alone.

At the same time, transaction volumes remained subdued owing to high interest rates. Cushman & Wakefield’s Wong expects the emergence of substantial secondary stock in the Central Region next year, and for occupiers to remain cautious when considering capital expenditure.

Overall, given the market conditions and concerns surrounding WeWork, although there is still ticketed demand from tech companies, a more diversified range of demand drivers such as shadow space, private wealth, asset management and consumer goods have emerged to make up for the slack resulting from the slowdown in the tech sectors.