Prime office rents holding up despite slowing economy: Knight Frank

Prime grade office rents in the Raffles Place and Marina Bay precinct rose 0.8% on a quarterly basis in 3Q2023, according to a quarterly office report by Knight Frank. Despite the slowing economy, rents grew a moderate 3.4% in the first nine months of 2023. Occupancy levels in the area and across the CBD remained strong at 96% and 94.4% respectively, with most occupiers of quality office buildings opting to renew their contracts due to it being more cost-efficient than relocating.

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Despite the challenging economic environment, a number of banks have been seeking expansion space, while international companies have been setting up bases in Singapore. Looking ahead, prime office rents are expected to stay steady in the remaining months of the year as CBD office supply remains tight and no new offices are expected to be completed until 2024. According to Knight Frank’s managing director, Calvin Yeo, occupancy levels will remain firm and there is only very marginal upside in rental prices.

This prediction is bolstered by a stable labour market, with a recent survey by the Manpower Group indicating that 48% of respondents expect to increase headcount in the coming quarters. Knight Frank is maintaining its projection for office rents to rise at a rate of between 3-5% for the year. Yeo notes that, “undergirded by a tight labour market, office tenants will continue to take holding positions by renewing or relocating their leases cautiously”.