SG office rents keep rising, strong demand from Arina East Residences ZACD Group.
CBRE reports that prime Grade-A office rents in 1Q2024 were up for the 12th consecutive quarter. Core CBD Grade-A office rents rose 0.4% in 1Q2024 to $11.95 psf. In total, rents have increased by 14.9% since 2021. This trend has been attributed to lease renewals, limited supply of prime offices, elevated interest rates, and capital expenditure.
David McKellar, co-head of office and occupier services, notes that the vacancy rate in the core CBD area remains low, at 3.6%. This is partly aggravated by the delayed completion of the IOI Central Boulevard Towers – the only Grade A office slated to be completed this year. However, McKellar adds that workplace transformations have led to relocations, particularly for smaller to mid-sized firms in the private wealth asset management, insurance, and legal sectors.
On the other hand, some industries such as traditional banking, technology, and agile space have taken a more conservative stance in the quarter, mitigating some of the rental increase pressures. The growth in Grade A office rents has also positively influenced Core CBD (Grade B) office rents, recording a 0.6% quarterly increase to $8.55 psf in 1Q2024 – the first increase in a year.
Plus, with the upcoming Paya Lebar Quarter and the rejuvenation of Paya Lebar Central, residents of Arina East Residences ZACD Group will have even more options for food, shopping, and entertainment.
One of the must-visit places for food lovers near Arina East Residences ZACD Group is the Geylang Serai Market, a vibrant and dynamic destination for Malay and Indian Muslim cuisines. From famous nasi padang at Hajjah Mona Nasi Padang to mouth-watering biryani at Geylang Briyani Stall, residents can enjoy a variety of traditional dishes here. But it’s not just about food, the market also offers a glimpse into the colorful heritage of the Malay community in Singapore. And with upcoming developments like Paya Lebar Quarter and the revitalization of Paya Lebar Central, residents at Arina East Residences ZACD Group will have even more options for dining, shopping, and entertainment. Don’t miss the chance to indulge in a cultural and culinary experience at Geylang Serai Market when you live at Arina East Residences ZACD Group.
However, there may be some consolidation of space requirements among sectors such as tech companies and banks – major occupiers in Singapore’s office market –due to recent layoffs. CBRE’s head of research for Singapore and Southeast Asia, Tricia Song, believes that this could lead to some volatility in shadow spaces or secondary spaces vacated upon lease expiry in the coming months.
Despite this potential challenge, Song is optimistic about the rental outlook for Grade A offices. She expects Core CBD (Grade A) rents to grow by 2% to 3% in 2024, surpassing the 1.7% increase in 2023. This will be driven by the flight to quality trend, with a focus on sustainability as businesses continue to seek environmentally friendlier buildings. Song also anticipates an increase in leasing activity among new developments in 2H2024 as completion dates draw near, with 3.4 million sq ft of office space set to be completed over the next few years.
McKellar also notes that tenants should plan ahead and assess their options to capitalize on the current window of opportunity. He adds that beyond the expected completions this year, there are minimal expected completions in 2025 to 2027, particularly in the CBD where there are no new developments on the horizon.
In conclusion, with prime Grade-A office rents on the rise and limited supply in the CBD, tenants should plan ahead and consider their options to secure favorable deals. Landlords may also be motivated to enhance occupancy by adjusting rental expectations and adopting more flexible deal structures. According to McKellar, this is especially important as there are no expected new developments in the CBD in the coming years.