Singapore prime office rents up 1.5% in Q4 2021

But full-year rents declined 0.3% in 2021.

Rents of prime grade offices in Singapore’s Raffles Place / Marina Bay are showing signs of recovery after over a year of weak performance. 

According to Knight Frank data, rents increased for the second consecutive quarter in Q4 2021, inching up 1.5% q-o-q to S$10.13 psf pm following a 0.2% increase last quarter. The full-year decrease in prime office rents in 2021 was 0.3%, marginal compared to the decline of 10.2% in 2020. 

Here’s more from Knight Frank:

There was a moderate 1.8 percentage point (pp) decline in Q4 occupancy levels in the Raffles Place / Marina Bay precinct to 91.8%, mainly attributed to the completion of CapitaSpring. Although the building is already 90% pre-committed, many of the tenants have not physically moved in yet. 

Nevertheless, even amid the general shrinkage in office space usage due to flexible workplace mandates driving the ongoing workplace revolution, the overall CBD occupancy remained solid at above 90.0%.

Demand drivers

The reconfiguration of offices such that less space can be used more collaboratively by more staff continues to drive the “flight-to-quality”, as corporates increasingly take up better but less space before rents start to increase substantially. With 47% of global respondents expecting the quality of their office space to increase over the next three years according to Knight Frank’s workplace report Y(our)Space 2021, business leaders are increasingly compelled to curate a productive, enjoyable, flexible, and healthy work environment that attracts and retains talent. 

As the office market transforms with hybrid-working brought from the margins to the mainstream, the quantum of space required by businesses will be significantly recalibrated, with some 69% of Y(our)Space respondents anticipating a portfolio resize by more than 10.0%. What remains undeniable is the role of the office to nurture productivity – 90.0% of respondents still regard the office as a strategic business device. 

However in this new age, employers would need to be sensitive to find the best balance from hybrid work arrangements, even after the government no longer mandates work-from-home. In the 2021 EY Work Reimagined Employee Survey, 54% of employees stated that they would consider leaving their jobs after the pandemic subsides if some form of workspace flexibility is not provided. 

Occupiers with shorter term enterprise ventures are incorporating co-working space as part of a distributed and hybrid workplace strategy, benefitting from more flexible leasing commitments. For example, data management firm DataStax which has recently set up a regional headquarters in Singapore, took up space in WeWork at Suntec Tower 5.

Fintech and technology players as well as international professional services also continue to fill good quality spaces in the CBD. New schemes like CapitaSpring have seen strong leasing activity supported by such industries. Investment-management firm Millennium Capital expanded to take up 60,000 sf, Pramerica Financial Asia took up 10,000 sf, while Southern Ridge Capital relocated to CapitaSpring in order to expand. Separately, LinkedIn expanded to lease a further 22,000 sf in MBFC Tower 2.