Singapore office rents see subdued growth in 1Q2023: JLL

Grade A office rents in Singapore’s Central Business District saw growth in the first quarter of 2023, though the q-o-q growth slowed relative to the previous quarter. According to research by real estate consultancy, JLL, the gross effective rent for these offices reached an average of $11.30 psf per month (psf pm).

Andrew Tangye, Singapore’s head of office leasing and advisory at JLL, attributes the slowing rental growth to macroeconomic uncertainties and the resultant decrease in demand for office space. He noted that large space users have “generally pressed the pause button” for expansionary and relocation plans.

Though the overall market is cautious, demand for quality office space has remained, allowing some occupiers to seize the opportunity and upgrade their offices. This is evidenced by recent commitments from occupiers in new developments such as Guoco Midtown in the Bugis-Beach Road area and IOI Central Boulevard Towers in the Marina Bay financial district.

Tenants in these buildings come from various sectors, including financial services, technology, media and professional services. Outside the CBD, Labrador Tower in Pasir Panjang Road is expected to be 25% pre-committed before its completion in 2024.

Given the current macroeconomic environment, JLL’s head of research and consultancy, Tay Huey Ying, believes that office demand will remain muted. While leasing activity in recent and upcoming completions is expected to remain steady, backfilling vacancies due to relocating occupiers could take longer to occur.

Tangye predicts that rental growth will accelerate again post-2024, buoyed by a drop in new completions and an improvement in economic prospects. He recommends that, with the current market conditions, now would be a good time for occupiers to lock in spaces in quality office buildings.