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.
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.
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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