But still 36 per cent off peak levels in 2008
by Linette Lim 04:45 AM Aug 01, 2011SINGAPORE – Grade A office rents are on the rise, but are still some 36 per cent off its peak levels in 2008.
This is according to Cushman & Wakefield Research presented at the recent Real Estate Developers’ Association of Singapore (REDAS) Property Prospects Update Seminar.
Average rents of Grade A space in the Raffles Place area remain the highest, increasing 30 per cent year on year to S$10.40 per square foot per month. Overall average rents – which includes Grade A office space in Shenton Way, Orchard and the City Hall-Marina-Bugis areas – are at S$9.15 per sq ft per month.
Cushman & Wakefield vice-chairman Donald Han said the “rental recovery of Grade A office space is on the back of sustained vacancy decline”. This is brought about by Singapore’s economic rebound, especially in the financial and business services sectors.
In the second quarter of this year, vacancy rates of all Grade A office space were low, standing at about 4 per cent.
Rising rents of Grade A office space may also bring an uplift to suburban office rents. This happens as cheaper office space in the suburbs become more attractive to tenants.
Mr Han said he foresees “major relocation to suburban locations due to greater price difference and availability of high-specification office developments with integrated facilities”.
Quite a number of major pre-commitments have been made to suburban offices this year. For example, the Ministry of National Development will be taking up some 315,000 sq feet at Jurong Gateway, while Deutsche Bank and Nike will be taking 120,000 sq feet each at Mapletree Business City.
He added that the lacking of car-parking space in the financial district may also be a potential push factor.