Singapore office rents see subdued growth in 1Q2023: JLL
Grade A office rents in Singapore’s CBD have experienced a slowing in growth for the second consecutive quarter, with figures from JLL showing that the gross effective rent for CBD Grade A office spaces rose by just 1.0% q-o-q in 1Q2023. This marks a decrease from the 1.2% q-o-q growth in the previous quarter and is attributed to macroeconomic uncertainties that have dampened demand for office space. According to JLL Singapore’s head of office leasing and advisory, Andrew Tangye, large space users have “pressed the pause button” on relocation plans.However, occupiers not in need of large spaces have actively sought out office spaces in new and upcoming office completions such as Guoco Midtown in the Bugis-Beach Road area and IOI Central Boulevard Towers in the Marina Bay financial district. JLL estimates that 80% of Guoco Midtown’s space and 45% of IOI Central Boulevard Towers is already pre-committed or under advanced negotiations.Occupiers who have recently committed to spaces or are in active negotiations at these two sites include companies from sectors like financial services, technology, media, and professional services.
Grade A office rental in Singapore’s CBD has experienced slowing growth for the past two quarters. In 1Q2023, JLL’s research showed that the gross effective rent for CBD Grade A office spaces had grown 1.0% q-o-q to an average of $11.30 psf pm. This marks a decrease from the 1.2% q-o-q growth in the previous quarter.
Andrew Tangye, JLL Singapore’s head of office leasing and advisory, attributes this easing rental growth to macroeconomic uncertainties that have dampened the demand for office space. He notes that large space users have “pressed the pause button” on expansionary and relocation plans. This has seen small-to-medium-sized space occupiers, such as new market entrants and those looking to accommodate their new workplace designs and increased hirings, driving the leasing activity in 1Q2023.
Outside the CBD, new office completions such as Guoco Midtown and IOI Central Boulevard Towers have seen some occupiers taking advantage of the tight supply of Grade A office space and upgrading to better office spaces. JLL estimates that 80% of Guoco Midtown’s space and 45% of IOI Central Boulevard Towers has already been pre-committed or are under advanced negotiations. These occupiers mainly come from the financial services, technology, media, and professional services sectors.
JCube Condo Residence is set to replace the existing JCube in Jurong East, Singapore. It will be a 40-storey residential and commercial development with pricing potentially at S$2,000 to S$2,100 per square JCube Residence foot. Launching in 2023, the new development will bring with it more homes and businesses to the JLD.
Labrador Tower along Pasir Panjang Road is estimated to be 25% pre-committed one year ahead of its completion in 2024, and Prudential, the fine wine merchant Corney & Barrow, and German insurer Munich Re are some of the occupiers who have recently committed to spaces or are in active negotiation at the new office completions.
Although the current macroeconomic environment has led to a “cautious mood”, JLL Singapore’s head of research and consultancy, Tay Huey Ying, believes that the return in demand will see rent growth accelerating post-2024. She adds that this is the ideal time for occupiers, especially those in need of large spaces, to lock in spaces in good quality new office buildings.