OFFICE rents in the Central Business District (CBD) rose in the first quarter of 2023, driven by tight supply and buoyant demand for flexible and scalable office space. This is despite worsening economic sentiment and layoffs in the tech sector.
Knight Frank Singapore indicated that prime-grade office rents in the Raffles Place/Marina Bay precinct increased 1.3 per cent quarter on quarter in Q1, averaging S$10.83 per square foot per month.
Occupancy levels in the CBD remained broadly unchanged compared with the previous quarter, with 94.1 per cent of office buildings occupied.
Prime office spaces in Raffles Place/Marina Bay had an occupancy level of 95.4 per cent, a slight dip from 95.5 per cent in Q4 2022.
Knight Frank attributes the steady occupancy rates to selected office buildings undergoing redevelopment or asset enhancement, which helped to remove stock from the market.
On Monday (Mar 27), Knight Frank noted that there is a high demand for quality office spaces that foster a superior work experience. This comes as companies seek to attract their employees to return to the office as productivity becomes key, in view of the deteriorating business outlook.
“Quality office spaces remained full as businesses continued to relocate headquarter functions to Singapore, with the city-state a ‘flight-to-safety’ hub amid seemingly unrelenting global disruptions,” observed the consultancy, referring to the recent collapse of Silicon Valley Bank and Credit Suisse coming under stress.
One such example is the newly completed Guoco Midtown, which Knight Frank notes to have an 80 per cent occupancy rate from tenants across industries, due to favourable supply-led-demand dynamics.
“As supply of new office inventory continues to remain tight, especially in the CBD, the upward rental trend continued to reflect a resilient market,” it added.
Projects expected to contribute to upcoming office supply across Singapore include IOI Central Boulevard Towers in Downtown, One Holland Village in Queenstown and the Surbana Jurong Campus in Cleantech Loop.
“Prime office rents are thus expected to be stable with an increment to be around 3 per cent for the whole of 2023,” Knight Frank added.