Grade-A office in 2Q2018 grows at fastest rate in 17 quarters

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/ EdgeProp Singapore
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July 30, 2018 7:02 PM SGT
Rentals of office space in Central Region increased by 1.6% q-o-q in 2Q2018, marking its fourth consecutive quarter of growth. This was at a slower pace when compared with 1Q2018, which registered a 2.6% q-o-q increase.
The Singapore office market is becoming a two-tier market, with the focus on Grade-A office properties as companies focus on efficiency, notes CBRE. Office demand continues to be driven by co-working operators, and to a lesser extent, technology firms, adds CBRE.
Fierce competition in the e-commerce and ride-hailing sector has led to rapid expansion. Lazada renewed and expanded its space by 3.6 times in AXA Tower occupying around 109,000 sq ft in total. Indonesian giant Go-Jek plans to recruit ‘hundreds of staff’ in Singapore to support its roll-out in the city-state and the region. This necessitates further expansion of its office space, also in AXA Tower, says Christine Li, Cushman & Wakefield (C&W) senior director of consultancy.
Lazada renewed and expanded its space by 3.6 times in AXA Tower, while Indonesian giant Go-Jek plans to recruit ‘hundreds of staff’ in Singapore to support its roll-out in the city-state and the region, necessitating further expansion of its office space, also in AXA Tower (Credit: Corp Locations)

Multiple co-working spaces in one building

The co-working trend is expected to continue but with a twist: Instead of the current practice of landlords granting an exclusivity clause to serviced office and co-working operators, there could now be multiple operators in the same building. C&W’s Li points to Suntec City, which offers a wide range of serviced office and co-working options from Arcc Offices to Centennial, Regus, Servcorp, Ucommune and WeWork.
According to C&W, Grade A rental growth accelerated to 3.8% in 2Q2018, the fastest pace of growth in 17 quarters since 1Q2014. Office stock increased by 646,000 sq ft in 2Q0218, largely as a result of the completion of Frasers Tower. Despite the increase in stock, island-wide office vacancy rate came off from 12.5% to 12.2%.
Net absorption increased five-fold by 797,000 sq ft in 2Q2018 compared with the increase of 151,000 sq ft in the previous quarter. This has brought the total net demand island-wide for the 1H2018 to 947,000 sq ft, even higher than the 646,000 sq ft for the whole of 2017.
Suntec City offers a wide range of serviced office and co-working options from Arcc Offices to Centennial, Regus, Servcorp, Ucommune and WeWork (Credit: Samuel Isaac Chua/EdgeProp Singapore)