Market Research

Office Market Review Q2 2024

We expect Grade A office space ‘effective rates’ to remain stable in 2024, averaging around $11.00 per sq ft, and $12.35 per sq ft for top Premium Grade A space. These rents will indeed be supported by tight supply conditions, but demand is still relatively weak. Some tenants are resisting further rate advances.

Singapore Office Market Review Q2 2024

Office Market Update

Q2 2024
Contents include:
  • Recommended Leasing Options
  • Latest Rental Rates
  • Future Office Developments


Demand


We expect demand for the new schemes, like IOI Central Boulevard Towers in Downtown to gain momentum. The retrofit of Singapore Land Tower is nearing completion and tenant interest here is expected to increase in the next two quarters.

Hong Leong Building has been particularly active, because the landlord is offering very competitive rates and the much-needed refurbishment will be a huge improvement, from a rather dated image.

Some of the major schemes scheduled for completion in Q4 2024 and Q2 2025, such as Keppel South Central and Shaw Tower respectively, have also come onto the radar of more tenants.
  • The firm office rental market belies the fact that demand remains fragile.
  • Most tenants are looking for lease extensions/renewal, whilst some need to relocate because their landlord wants their space back.
  • A significant number of tenants are expanding out of business centres, but their size requirements are usually quite modest.
  • Whilst the big financial institutions and tech firms (the traditional powerhouse driving demand) continue to reduce their footprint, large space requirements have dwindled.
  • Sectors still active include hospitality, law firms, energy, and other professional services.

Supply


  • Supply of office space remains very light, but so has demand, so the two are balancing each other out.

  • Some of the newly refurbished buildings offer very attractive rates, in a much-improved ambience. But the office space itself remains largely unchanged and are not adding any new overall supply.

  • In 2024 there will be just under 2 million sq ft of office space coming on stream, over half of which will come from IOI Central Boulevard (40% pre-committed), and the rest will be at fringe or decentralized locations.

Rentals / Forecast


The marginal rental decline in the top-Grade A sector last quarter is expected to persist throughout most of 2024, but will be hardly noticeable. The amount of shadow space available has reduced significantly and will continue to do so, as those leases expire in 2024/25.

We expect Grade A office space ‘effective rates’ to remain stable in 2024, averaging around $11.00 per sq ft, and $12.35 per sq ft for top Premium Grade A space. These rents will indeed be supported by tight supply conditions, but demand is still relatively weak. Some tenants are resisting further rate advances.

Lease renewal negotiations can sometimes be trickier than new leases, but landlords are also keen to hold onto their existing tenants.

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