Singapore CBD Grade A office rents inch up 0.3% in Q3

And vacancy rates increased to 5.5% during the same period.

According to Cushman and Wakefield, Singapore CBD Grade A office rents continued to edge higher, albeit at a moderate pace. CBD Grade A office rents reached $10.87 psf pm, up 0.3% qoq in Q3 2024, this compares to the 0.2% qoq increase in the previous quarter. 

In the three quarters of 2024, CBD Grade A office rents grew by 1.1% ytd, lower than the 1.3% growth in the same period last year.

Here’s more from Cushman and Wakefield:

CBD Grade A office vacancy rates are poised to rise to about 5.5% in Q3 2024 (as of 23^rd Sept), from 5.4% in Q2 2024 as some occupiers consolidated their office footprints.

Although vacancy rates have increased, office deal activity has rebounded, fueled by interest from financial institutions, professional services firms, and flexible workspace operators.

“Singapore's Grade A office market continues to hold steady, supported by fairly limited office supply and enduring demand from occupiers seeking premier spaces for brand positioning, talent acquisition and retention, and ESG compliance.” says Jeryl Teoh, Senior Director, Co-Head of Commercial Leasing at Cushman & Wakefield.

A continued decline in US interest rates amidst a benign global economic situation may improve occupier confidence, leading to stronger hiring and office demand. Additionally, CBD Grade A office supply will tighten in 2025, with only one major office development, Keppel South Central, expected to be completed next year. Shaw Tower is expected to be completed only in 2026, instead of 2025. New office supply in the CBD will halve from 2024 levels to about 0.6 msf per year in 2025 and 2026 and is below historical net demand of about 0.8 msf per annum.

While the market is still going through a relatively soft patch amidst still-elevated interest rates, there are several catalysts on the horizon that could escalate demand and rent growth. Barring an unforeseen deterioration in economic conditions, most landlords are expected to hold on to their asking rents with most Grade A offices remaining well occupied. For 2024, we continue to hold on to our CBD Grade A office forecast at 0-2% yoy.

“Given the impending decline in interest rates and delay in new office completions, occupiers need to be ready to capitalise on opportunities before a potential increase in optimism.” Deyang Leong, Senior Director, Co-Head of Commercial Leasing at Cushman & Wakefield added.