Prime office rents holding up despite slowing economy: Knight Frank

Grade A office rental rates in the Singapore financial district increment by 0.8% q-o-q in 3Q2K23 to median at $11.05 psf per month, as revealed by a quarterly office data collated by Knight Frank. “The softening economy did not deter office rents from being stable, with prime office rental rate having a steady increment of 3.4% in the first nine months of 2K23,” says Calvin Yeo, managing director, occupier strategy and solutions at Knight Frank Singapore.

Take up rates in the financial district along with the overall CBD also continue to be firm, raking in at 96% and 94.4% respectively in 3Q2K23. In the previous quarter, occupancy rate stood at 95.8% and 94.1% individually. Knight Frank commented that most office renters in prime office buildings in the CBD were more inclined to extend their lease agreement as it is more cost-effective and make economical sense in comparison to relocating.
Additionally, Knight Frank observed that a several numbers of banks have been exploring options for “modest expansion space”, despite bigger scale global banks such as UBS and Standard Chartered announcing reductions in headcounts recently. Meanwhile, international firms continue to set up locations Singapore, with companies such as San Francisco-based global human resource firm Deel and Japanese firm Exeo Global opening regional offices in the city-state.
Moving forward, prime office rents are anticipated to hold steady in the remaining months of the year as CBD office supply continue to tight. “With no new office inventory expected to complete in the CBD until 2K24, occupancy levels will continue firm, with very insignificant rental upside,” comments Knight Frank’s Yeo. Knight Frank is keeping its projection for office rents growing between 3% to 5% for the entire year.
The anticipation is supported by a stable labour market, with a survey by the Manpower Group indicating 48% of surveyors apprehend to increase manpower in the next few quarters. “Undeterred by a labour crunch market, office renters will continue to take holding positions by extending or relocating their rental carefully,” says Yeo

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