Singapore office rents fall in 3Q2023 on weaker demand: JLL
Tay Huey Ying, JLL Singapore’s head of research study and consultancy, acknowledges, including that office rent modification ended up being a lot more extensive this past quarter. “Our analysis reveals that greater than 15 investments regulated lesser leas in 3Q2023 than in 2Q2023, which dragged down the common hires for CBD Level An area for the very first time since they reversed in 2Q2021.”
Singapore business office leas slid in 3Q2023, according to data documented by JLL in a Sept 25 news release. The consultancy adds in that it marks the very first quarterly downtrend following 9 constant quarters of office rental development in the city-state.
She expects downward force on office rents to escalate, with hires correcting further in the coming months amidst the existing macroeconomic environment and arriving workplace supply. “Against the backdrop of an increase of upcoming ventures competing for a small pool of lessees, the temporary overrun of workplace could end up being more pronounced,” she includes.
The decline comes from ongoing economic forces, states Andrew Tangye, head of workplace leasing and advisory for JLL Singapore. “The unsure near-term outlook stemming from a combination of slowing down financial progress, geopolitical stress and rising rates have remained to keep tenants careful and even cost-conscious, causing weak workplace take-up,” he adds.
He connects the reduced hires to more supply from office stock being returned to sale “at an escalating pace” as more occupants right-size upon lease renewal to take care of prices.
JLL’s analysis presents that gross efficient rental for Level An office in the CBD fell 0.3% q-o-q to approximately $11.29 psf monthly in 3Q2023, below $11.32 psf per month in 2Q2023.
3 office ventures are scheduled for finalization in the CBD over the next 24 months– IOI Central Boulevard 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 estimated to be still unaffiliated.
Beyond the short-term headwinds, the medium-term overview for Singapore’s Grade A CBD workplace leasing market stays bright, JLL says. Demand will certainly be supported by Singapore’s expanding reputation as an international hub, while the supply of office in the CBD will continue to be constrained by a scarcity of greenfield locations along with URA’s focus on adding even more live and play spaces downtown.