Office rents up for 5th consecutive quarter: URA

By
/ EdgeProp Singapore
|
October 28, 2018 5:53 AM SGT
Demand for office space has continued to outpace supply for the fourth consecutive quarter in 3Q2018, and this has driven a fifth straight quarter of rent growth, according to URA data. The URA office rental index for the Central Region climbed 12.2% from the bottom in 2Q2017, but is still some 8.5% below the recent peak in 1Q2015, notes Tay Huey Ying, JLL head of research for Singapore.
The URA office rental index rose 2.5% q-o-q in 3Q2018, led by the Central Area, which rose 3% q-o-q, the strongest rental growth since 2Q2014, says Christine Li, Cushman & Wakefield (C&W) senior director of research.
For the first nine months of 2018, the office rental index was up 7.9% on the back of stronger GDP growth, recovering business sentiment and a dearth of quality Grade-A office supply. “Landlord in Singapore are now in a strong position to resist demands for lower rents because of the limited amount of new space available over the next two years,” says Li.
Landlord in Singapore are now in a strong position to resist demands for lower rents because of the limited amount of new space available over the next two years (Photo Credit: Samuel Isaac Chua/EdgeProp Singapore)
Net demand for 3Q2018 was 45,000 sqm (484,380 sq ft), led by strong take-up by office occupiers in the Downtown Core which accounted for 38,000 sqm of the space absorbed in 3Q2018. This brings total islandwide demand to 133,000 sqm for the first nine months of the year, adds Li. This compares with a total net demand of only 5,000 sqm for the same period in 2017.
There was a resurgence of demand by tenants in the financial sector drove leasing activity during 3Q2018, adds Li. HSBC Bank signed a one-year lease extension for its existing premises of 200,000 sq ft in HSBC Building while concluding a deal to relocate and take up 140,000 sq ft at MBFC Tower 2 in 2020. In addition, Allianz inked a lease for 50,000 sq ft in ASB Tower (the new tower on the site of the former CPF Building on Robinson Road).
The co-working segment continues to make huge strides with Hong Kong-based Campfire in negotiations to take up 85,000 sq ft at 139 Cecil Street. Meanwhile, JustCo is taking up the second floor of China...