Office Market Review
Rentals / Forecast Q3 2023
Current rental rates for top Grade A buildings have edged forward, but still average around $13.00 per sq ft (average effective) depending upon the size of the units. Upper mid-range office space varies from $10.50 to $11.50 per sq ft and lower mid-range is between $7.75 to $9.00 per sq ft. The most expensive office building in Singapore is currently OUE Bayfront – asking $16.50 per sq ft (with full bay views).
Rental rates are firming, not because demand for new office space is strong, but because supply is so tight. Many more companies are opting to renew or extend their leases for the time being, but as landlords are aware that the alternative options are limited, this can make the lease renewal negotiations more challenging than previously.
There is no prospect of rental rates softening any time soon and the continued restrictions in supply, will serve only to support the landlord’s position of strength. To compensate, we expect tenants to work out a way 'to do more with less'. In most cases, this will involve maximizing the efficiency of their current space or moving to less generous space.
We anticipate rates to advance modestly in prime locations in the next 12 months, as they are already at their highest for over 15 years. The peak of 2008 was an artificial high and that bubble burst quite spectacularly soon after. Rentals in the secondary locations are expected to advance, as demand will have nowhere else to go. However, some buildings in tertiary locations are still struggling to attract tenants, mainly because of their age or accessibility.
Rental rates are firming, not because demand for new office space is strong, but because supply is so tight.
Singapore Office Market Review
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PDF includes additional content
- Future Developments
- Summary of Grade A Office Stock
- Recommended Leasing Options