According to CBRE, Grade A CBD office rents rose another 4.1% q-o-q (+12.8% y-o-y) to S$10.10 psf/mth, following the 3.2% q-o-q (+8.4% y-o-y) increase in 1Q18 and having bottomed in 1Q17-2Q17 at S$8.95 psf/mth. The jump in office rents is largely attributed to landlords seeking higher rents given the healthy economic backdrop in Singapore as the pick-up in the manufacturing sector feeds through to the services sector.
Based on CBRE data, the Singapore office market achieved net absorption of 503,907 sqft, up from 149,444 sqft in 1Q18. Consequently, Grade A CBD occupancy was relatively steady at 94.1% despite the addition of Frasers Tower (663,000 sqft) into the overall CBD office stock. Meanwhile, Grade B office rents continued their steady rise although at a slower pace than Grade A’s, increasing 2.6% q-o-q (+7.6% y-o-y) to S$7.80 psf/mth. This is largely expected and follows historical trends of Grade B being relatively more stable, i.e. not rising as rapidly as Grade A rents during an upturn but also not falling as fast during a downturn.
Source: DBS Research
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