Singapore office rents fall in 3Q2023 on weaker demand: JLL
The decline comes from recurring economic tensions, states Andrew Tangye, head of office leasing and also advisory for JLL Singapore. “The uncertain near-term outlook coming from a combination of slowing down financial progress, geopolitical stress and rising rates have actually continued to maintain tenants cautious and cost-conscious, leading to weak workplace take-up,” he adds.
Tay Huey Ying, JLL Singapore’s head of research study as well as consultancy, concords, adding that office rental adjustment became much more extensive this previous quarter. “Our study displays that more than 15 investments commanded lesser leas in 3Q2023 than in 2Q2023, which grabbed down the average rents for CBD Grade An area for the very first time ever since they reversed in 2Q2021.”
JLL’s research shows that gross efficient rent for Level An office space in the CBD fell 0.3% q-o-q to around $11.29 psf each month in 3Q2023, down from $11.32 psf per month in 2Q2023.
Singapore office rental fees dropped in 3Q2023, according to information disclosed by JLL in a Sept 25 announcement. The consultancy includes that it marks the very first quarterly downtrend following 9 constant quarters of office rental growth in the city-state.
He associates the reduced rents to a lot more supply from office space supply being gone back to the marketplace “at an escalating rate” as even more occupiers right-size upon rental renewal to handle expenses.
She anticipates descending pressure on workplace rents to heighten, with leas correcting even more in the coming months amid the existing macroeconomic setting as well as arriving office supply. “Against the backdrop of an increase of future ventures challenging for a very little pool of occupants, the short-term overrun of office can become more pronounced,” she includes.
3 workplace projects are arranged for completion in the CBD over the following 24 months– IOI Central Boulevard Towers (1.3 million sq ft) along with Keppel South Central (0.6 million sq ft) in 2024, and also the redeveloped Shaw Tower (0.4 million sq ft) in very early 2025. JLL states that to date, over 1.5 million sq ft is approximated to be still uninvolved.
Past the temporary headwinds, the medium-term expectation for Singapore’s Level A CBD office renting market remains rich, JLL says. Need will be sustained by Singapore’s growing reputation as a global hub, while the supply of workplace in the CBD will remain constricted by a shortage of greenfield locations together with URA’s focus on injecting even more live and play spaces downtown.