Singapore office rents fall in 3Q2023 on weaker demand: JLL
JLL’s research study presents that gross efficient rent for Level An office in the CBD slipped 0.3% q-o-q to around $11.29 psf monthly in 3Q2023, down from $11.32 psf monthly in 2Q2023.
Singapore office rents declined in 3Q2023, according to information disclosed by JLL in a Sept 25 announcement. The consultancy includes that it observes the very first quarterly downturn adhering to nine continuous quarters of office rental growth in the city-state.
The decline comes from continuous economic pressures, states Andrew Tangye, head of office space leasing as well as advisory for JLL Singapore. “The uncertain near-term forecast originating from a mixture of lagging economic development, geopolitical stress and climbing costs have actually remained to maintain occupants cautious and even cost-conscious, resulting in weaker office take-up,” he adds.
Three office jobs are scheduled for finalization in the CBD over the next 24 months– IOI Central Blvd Towers (1.3 million sq ft) and Keppel South Central (0.6 million sq ft) in 2024, and the redeveloped Shaw Tower (0.4 million sq ft) in early 2025. JLL states that to date, over 1.5 million sq ft is predicted to be still uninvolved.
Tay Huey Ying, JLL Singapore’s head of study as well as consultancy, recognizes, putting in that workplace rent correction ended up being extra extensive this previous quarter. “Our evaluation reveals that more than 15 assets regulated reduced leas in 3Q2023 than in 2Q2023, which dragged down the common rents for CBD Level An area for the first time ever since they turned around in 2Q2021.”
She expects downward pressure on office rental fees to heighten, with hires dealing with further in the coming months amid the current macroeconomic setting as well as incoming workplace supply. “Against the backdrop of an influx of coming ventures challenging for a small pool of tenants, the short-term balance of office might become a lot more obvious,” she includes.
He attributes the reduced leas to more supply from workplace stock being actually gone back to the market “at an increasing pace” as even more occupiers right-size upon lease renewal to take care of prices.
Past the temporary headwinds, the medium-term outlook for Singapore’s Grade A CBD office renting market remains bright, JLL suggests. Interest will certainly be sustained by Singapore’s blossoming reputation as a global center, while the supply of office in the CBD will continue to be constricted by a shortage of greenfield locations along with URA’s emphasis on adding more live and play places downtown.