Office rents plateau in 3Q2024 as CBD vacancy rate climbs for second consecutive quarter: JLL
Dr Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia, feature that small and mid-sized inhabitants in development industries such as financial companies, professional services, and developing tech industries have mainly driven workplace demand over the past 12 months.
The pushback in Shaw Tower’s completion from 2025 to 2026 will certainly even more worsen scarcity. “Occupants aiming to expand or transfer in 2025 just have one new structure to choose from: Keppel South Central (0.6 million sq ft) in the Shenton Way and Tanjong Pagar sub-market. This restricted supply might move industry dynamics back in landlords’ favour,” Tangye claims.
Dr Chua even expects business office rent development to “stay modest” through 2024, in front of a more sturdy healing in 2025 due to enhanced global economic conditions backed by lower rates of interest and companies adjusting to brand-new work systems and development methods.
Nonetheless, the global economic slowdown and the recurring delay in US interest rate cutbacks have actually affected need. Andrew Tangye, head of office leasing and advisory at JLL Singapore, notes that net take-up of office space has lowered as companies in Singapore come to grips with increasing operating costs and exercise caution regarding capital expenditures. Additionally, work environment optimisation has caused some lessees minimizing their office footprint upon lease expiry.
The environment offers possibilities for occupiers looking to upgrade to superior units in top notch buildings, claims Tangye. “For example, a substantial portion of Meta’s previous room at South Beach Tower has actually been re-let or is currently in advanced arrangements,” he adds. The area has drawn in interest from existing tenants in the structure as well as tenants transferring from many others CBD establishments.
He adds that the current state decision to not award the Jurong Lake District Master Developer site and place the location back on the reserve list has brought about a “more restricted expectation” for new office supply throughout Singapore. If this pattern lingers, it could lead to tight office supply issues in the medium term, he adds.
Tangye anticipates whole CBD vacancy fees to remain raised over the next few quarters as inhabitants require time to shift into their new office spaces. However, the real physical availability of supply in some key office clusters remains minimal.
Gross effective rental payment for CBD Quality A workplaces in 3Q2024 remained the same at $11.50 psf per month (pm) in 3Q2024, according to data from JLL published on Sept 23. This complies with a 0.7% q-o-q growth in 2Q2024, a stagnation from the 1.4% q-o-q development in 1Q2024.
The rental development plateau accompanies a second consecutive quarter of increasing openings rates for Quality A workplaces in the CBD, that reached 8.3% q-o-q in 3Q2024. This rise is greatly due to the latest finalization of the IOI Central Boulevard Towers (IOICBT). JLL details that occupiers are becoming increasingly resistant to rent walkings amid this uptick in openings. Excluding the IOICBT, the CBD Grade An openings rate would have stayed relatively tight, akin to the post-pandemic low of 5.3% in 1Q2024.
