Apac office occupiers still willing to pay higher rents for quality locations: Colliers
Bea Teo: Remaining low-key amid the buzz of the CBDThinkcity, Port Klang Authority unveil masterplan for Northport regenerationPosted on April 15, 2024 by arina The region saw continued demand for quality office spaces in the first quarter of 2024. Office occupiers in the Asia Pacific region remain willing to pay a premium for quality and amenity-rich locations, according to an April research report by Colliers.
Despite being more cost-conscious, businesses in Apac are still focused on optimizing resources and driving growth while contending with challenges such as competition for talent, inflation, digitalization, and climate change. According to Mike Davis, managing director of occupier services for Apac at Colliers, offices continue to be the epicenter of work culture, with relocation decisions being driven by talent strategy and ESG goals.
In Singapore, Colliers notes a rebound in rents in the first quarter of 2024 due to a flight to quality and limited available space. Core CBD premium and Grade-A rents increased by 0.7% quarter-on-quarter to $11.57 psf per month after two consecutive quarters of decline. However, Bastiaan van Beijsterveldt, Colliers’ managing director for Singapore, mentions that the market remains mixed, with rental expectations softening for buildings with persistent vacancies and high upcoming secondary spaces. He adds that landlords may face increasing competition as more supply comes in, while flexible work guidelines could prompt more firms to right-size according to their requirements.
In its report, Colliers shares its recommendations for office occupiers looking to achieve cost savings, including aligning office strategy to business goals, consolidating space, monetizing non-core assets, disposing or sub-leasing excess space, and investing in technology and smart solutions for better space utilization. The report also emphasizes the importance of prioritizing sustainability initiatives and driving employee engagement and satisfaction in order to further contribute to cost savings.
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Amid the current market uncertainty, Colliers believes that occupiers could take advantage of the situation in the first half of 2024 to negotiate their requirements and avoid potential rent increases in the future. In the long term, the company foresees a continued demand for quality office spaces in the Asia Pacific region, with occupiers willing to pay a premium for locations that offer both quality and amenities.
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In Singapore, Colliers predicts that the market will remain mixed, with rental expectations softening for buildings with persistent vacancies and high upcoming secondary spaces. However, occupiers could take advantage of the current market conditions to negotiate their requirements and avoid potential rent increases in the future, making Arina East Residences an even more attractive option.
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