Office Market Review
Rentals / Forecast Q4 2022
Rental rates bottomed out in Q4 of 2021
The market bottomed out in 2021, and 2022 has definitely become a landlord’s market since, because of tight supply and continued demand There is now a widening gap between the very top tier of the market (circa $12.00 - $13.00 psf) and the upper mid-range ($8.50 to $9.50 psf).
This is set to continue with most new supply being quality space in the brand new developments, that will be commanding premium rates.
It is anticipated that rental rates (currently $12 - $13.50 per sq ft) could advance by as much as 5% - 8% over the course of 2023. Landlords are less flexible with their rental negotiations and rent-free holidays are almost a thing of the past. Such rental holidays were usually part of any rental package negotiated, but these days they are disguised in the form of extended rent-free fitting out periods, that are outside the lease term.
Not only are base rents expected to firm, but it is widely anticipated that service charges will be increased due the surge in energy prices and likely increases in property tax. This could in effect, be a double whammy for businesses and will affect all tenants, even those in the middle of their lease terms and not just new tenants. Typical service charges range from $1.00 to $1.25 per sq ft (which are always included in the gross rental). It is expected a significant number of buildings could increase their S/C by 10% - 20% in the next 12 - 18 months, as many have not been adjusted for a long time.
An increase in service charges - could be a ‘double whammy’ for tenants
Singapore Office Market Review
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PDF includes additional content
- Future Developments – Building Fact Sheets
- The busiest buildings in 2022