CBD Grade-A office rents up by 2.1% q-o-q in 1Q2022: Cushman & Wakefield
By Hailey Yu
Singapore CBD District (Source: Albert Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - Rents for CBD Grade-A offices have risen by 2.1% in 1Q2022, higher than the 1.7% growth in the previous quarter, according to a report by Cushman & Wakefield on April 6. This comes as vacancy rates for CBD Grade-A offices tightened to 4.6% from 4.9% in the previous quarter.
CBD Grade A Rent and Vacancy (Source: Cushman & Wakefield)
Rents in decentralised office markets also continued to show improvement. Office rents for all grades in the city fringe and suburban segments grew by 1.1% and 0.7% q-o-q, respectively. City-fringe office vacancies have improved to 5.5%, while the suburban vacancy rate rose to 5.7%.
Wong Xian Yang, head of research, Singapore, at Cushman & Wakefield, predicts continued recovery for the decentralised office market, given commercial decentralisation activities, spillover demand from the CBD, and limited new Grade-A decentralised office supply.
“Rochester Commons, the only new Grade-A decentralised office development this year, has been mostly pre-committed by Sea Group. The next decentralised Grade-A office development, Labrador Tower, will only be completed in 2024,” she explains.
Overall, Cushman & Wakefield remains upbeat on the Singapore office market outlook, despite “increasing downside risks”. While it does not anticipate the Ukraine war to have a direct impact on the Singapore office market, inflationary pressures are expected to remain elevated due to higher energy prices and supply-chain disruptions exacerbated by lockdowns in China, which is a key trade partner for Singapore.
Nonetheless, the ongoing economic uncertainties could potentially slow the rise of interest rates, says Mark Lampard, head of commercial leasing, Singapore, at Cushman & Wakefield. The reopening of Singapore’s economy will also boost occupiers’ confidence to take up more office space, he adds.
Lampard anticipates CBD Grade-A office rental growth to trend higher, coming in at around 5% for the whole of 2022.
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