Singapore Grade A office rents inch up 0.5% in Q3

This is the second consecutive quarter of growth.

Apart from certain office buildings that have higher vacancy rates due to some of its tenants moving to the newly completed IOI Central Boulevard Towers, a Savills report noted that Grade A office occupancies in the Singapore CBD have largely remained tight. 

This has led to landlords keeping firm in their rents, with no motivation of lowering asking rents. 

Here’s more from Savills:

As such, the average monthly rents of CBD Grade A offices in Savills basket continued trending up for the second consecutive quarter, at around the same pace as the last quarter. 

For Q3/2024, rents rose by 0.3% QoQ to S$9.70 per sq ft. In Q2/2024, office rents inched up by 0.2% QoQ to S$9.67 per sq ft after having remained flat in the first quarter. Compared to the same period a year ago, office rents grew by 0.5%. 

By grades, QoQ growth was recorded for offices of all grades for the second consecutive quarter. Rents of both Grade AAA and AA offices rose 0.4% QoQ to S$12.79 per sq ft and S$10.58 per sq ft respectively in Q3/2024. 

As offices continue to remain low vacancies with leases of major tenants mainly ending next year, there is no pressing need for landlords to reduce rents to attract new tenants from entering. In a similar light, rents of Grade A offices also inched up 0.1% QoQ to S$8.59 per sq ft, relatively similar to the 0.2% increase in the previous quarter. 

Across the submarkets, two of the submarkets registered no rental change, while the remaining five submarkets saw rental increase in Q3/2024. Rents of Grade A offices in Orchard Road and Shenton Way remain unchanged. The other submarkets registered quarterly increases in office rents, ranging from 0.2% to 0.5%. 

The submarkets with the largest growth were City Hall and Tanjong Pagar, with rents increasing 0.5% QoQ, higher than the 0.4% and 0.2% respective rates of growth in the previous quarter. This was the second consecutive quarter of increase for both submarkets. For City Hall, the two consecutive quarters of growth came after a slight dip of 0.1% in Q1/2024.