Prime office rents holding up despite slowing economy: Knight Frank
Grade A office rents in the Raffles Place and Marina Bay district increase 0.8% q-o-q in 3Q2K23 to median at $11.05 psf per month, as reported by a quarterly office data collated by Knight Frank. “The declining economy did not obstruct office rents from being resilient, with prime office rents inching a gradual 3.4% in the first nine months of 2K23,” says Calvin Yeo, managing director, occupier strategy and solutions at Knight Frank Singapore.
Take up rates in the Raffles Place and Marina Bay district along with the overall CBD also remained stable, clocking in at 96% and 94.4% respectively in 3Q2K23. In the previous quarter, take up stood at 95.8% and 94.1% individually. Knight Frank commented that most office occupiers in prime office buildings in the CBD were more interested to extend their rental agreement as it is more economical savvy in comparison to relocating.
Additionally, Knight Frank noticed that a several numbers of banks have been scouting for “modest expansion space”, despite bigger scale global banks such as UBS and Standard Chartered announcing reductions in headcounts recently. Meanwhile, international firms continue to set up locations Singapore, with companies such as San Francisco-based global human resource firm Deel and Japanese firm Exeo Global opening regional offices in the city-state.
Moving forward, prime office rents are anticipated to hold steady in the remaining months of the year as CBD office supply continue to tight. “With no new office inventory expected to complete in the CBD until 2K24, occupancy levels will continue firm, with very insignificant rental upside,” comments Knight Frank’s Yeo. Knight Frank is keeping its projection for office rents growing between 3% to 5% for the entire year.
The prediction is backed up by a stable labour market, with a survey by the Manpower Group indicating 48% of surveyors apprehend to increase manpower in the next few quarters. “Undergirded by a labour crunch market, office renters will continue to take holding positions by extending or relocating their rental carefully,” says Yeo
