Prime Office Rents Reverse Decline With 1.4% Rise In Q3
Prime office rents crept up in Q3 amid higher leasing enquiries, according to a property consultancy firm. Reversing seven consecutive quarters of negative or flat growth, prime Grade A+ rents in Marina Bay and Raffles Place posted an increase of 1.4 per cent quarter-on-quarter (QoQ), hitting between $9.90 and $12.00 per sq ft (psf).
In this sub-segment, smaller office spaces remained in high demand from a larger pool of prospective tenants. These include smaller companies who were previously situated in serviced offices and are shifting back into traditional office space.
The latest premium Grade A office development to hit the market, CapitaGreen, is now open for discussion with interested tenants for early pre-commitments. Asking rents range from $13 to $14 psf. Other Raffles Place Grade A office rents, too, edged up 0.6 per cent QoQ, to between $9.30 and $10.45 psf, even as occupancy levels stabilised.
Despite climbing rents, a ‘flight to quality’ is causing landlords of older buildings located further from MRT stations to encounter more difficulty in filling up their vacated spaces, noted the firm.
Outside of the Central Business District (CBD), Orchard Road’s average office rents for Grade A space rose 3.1 per cent year-on-year, bolstered by rising asking rents for smaller office spaces. Compared with the last quarter, Orchard’s average office rents inched up 0.6 per cent, reaching between $7.00 and $10.90 psf.
In the Suntec/Marina Centre/City Hall area, average rents held firm, rising 0.5 per cent QoQ. Asking rents for office space in Suntec City are starting to rise, with major refurbishment works for the retail podium on track for completion by early 2014. Meanwhile, rents in the Beach Road/Middle Road cluster dipped 0.4 per cent drop QoQ, its third consecutive rental decline.
The firm singled out Buona Vista as a “rising bright spot in the western fringe area”, which has been boosted by the impending completion of the Metropolis. Demand for office space in its twin towers has been strong, and office rents for the remaining spaces are expected to hit $7 psf, comparable to average rents in Mapletree Business City.
The firm expects overall rents to creep up by around 0.3 per cent QoQ in Q4, buoyed by improving business sentiment, rising rent expectations from landlords, and the addition of new office developments. Average rents in the CBD are likely to stay firm or notch up modest increases of 0.2 to 0.3 per cent in Q4.