At the fourth quarter of 2022, prime office rentals in Raffles Place and Marina Bay increased by 1.7% quarter over quarter to $10.69 psf
Prime-grade office rents for Raffles Place and Marina Bay grew by 1.7% over a period of time to $10.69 per sq ft in 4Q2022, according information compiled by Knight Frank. This brings the year-over-year increase for prime office rentals up to 5.5%, exceeding Knight Frank’s prediction for 3.0% up to% at the beginning in the new year.
According to the company that rents were supported by the slack availability of office space in tandem with the steady demand for co-working and traditional office space. “The office market has turned into an occupant’s market for landlords,” says Calvin Yeo who is the managing director for strategies and solutions for occupiers, of Knight Frank Singapore.
The occupancy levels of those areas of Raffles Place as well as the Marina Bay precinct stood at 95.5% as of end-2022 The overall occupancy of the CBD has increased to 93.6% to 94.2% in the last quarter. Yeo puts this down to businesses searching for offices of high-quality which can facilitate the return of operations prior to the outbreak.
It is because more employees work from home full-time This is reflected in the percentage of remote workers expected to range between 10% to 15% less then the 20% predicted earlier. “The long-term use of hybrid working may not be as widespread and continuous in Singapore as was initially thought during the peak of the pandemic” says Yeo. Therefore the market for leasing remains active, with office workers seeking better spaces of higher quality.
Additionally, Knight Frank highlights that more flexibility and choices are offered by co-working locations in the CBD. For instance, Trehaus at Funan incorporates preschool and childcare services as well as Japanese co-working center One&Co is located at Twenty Anson supports Japanese companies expanding into Singapore. “Occupiers who aren’t sure if they want to move or renew their lease can opt for an interim co-working spaces, especially for those with smaller spaces,” says Yeo.
In the future, he anticipates slow growth in the rental market by 2023 for offices that are prime quality which is fueled by the macroeconomic downturn and the fluctuations in the tech industry that has led to the sacking of employees. But Singapore’s status as a safe-flight location is likely to help boost demand, as international companies moving into Singapore or shifting their the business operations to other regions of Asia.
Additionally, Yeo notes that despite the cuts to tech jobs and the decline in employment, levels of employment increased in non-tech firms like those in the financial and banking sectors, are taking on the talents available to build their technology platforms. A preliminary report from the Ministry of Manpower states that the unemployment rate for residents of executives, professionals, managers and technicians fell by 3.4% in 2021 to 2.6% in 2022.
Due to the consistent level of demand, and the limited supply of office space Yeo expects rents to rise approximately 3% over the course of 2023, excluding any significant pre-termination or removal of space leased by technology companies.