Singapore office rents see subdued growth in 1Q2023: JLL

Grade A office rents in Singapore’s CBD rose in the first quarter of 2023, according to data by real estate consultancy JLL. Despite this, the growth was slower than that seen in the previous quarter, as uncertainty surrounding the global economic outlook continues to hamper demand for office space.

Large space users are mostly hesitant when it comes to expansion or relocation plans, while the majority of leasing activity has been driven by small to medium-sized space occupiers with immediate requirements. Examples of such occupiers are German insurer Munich Re, who took two floors at 18 Cross Street for their new office, and Corney & Barrow, who relocated to Hub Synergy Point.

Despite the currently cautious attitude, tight supply of Grade A office space saw some occupiers seize the chance to upgrade to better office spaces at new developments. Prominent examples include Guoco Midtown, which received its Temporary Occupation Permit in January, and the soon-to-be completed IOI Central Boulevard Towers. 45% of its space is already pre-committed or under advanced negotiations.

In addition, Labrador Tower in Pasir Panjang Road, due for completion in 2024, is estimated to be 25% pre-committed one year ahead of its estimated completion. Prudential, with a two-year extension to their tenancy in November 2024, reportedly took 150,000 square feet of space at this Green Mark Platinum Super Low Energy building.

Head of Office Leasing and Advisory Andrew Tangye explains that while leasing activity in 1Q2023 is underwhelming, the current rent growth has presented some opportunities for occupiers. He notes that it is a good window to lock in spaces in good quality new office buildings.

Given the macroeconomic environment, Head of Research and Consultancy Tay Huey Ying anticipates that backfilling of spaces vacated by relocating occupiers could take a bit longer, and that rent growth is likely to remain modest. However, she is optimistic that rental growth will accelerate post 2024, as the economy improves and new completions dip.