Office rents plateau in 3Q2024 as CBD vacancy rate climbs for second consecutive quarter: JLL
The rental development plateau accompanies a 2nd consecutive quarter of increasing vacancy prices for Quality A workplaces in the CBD, which reached 8.3% q-o-q in 3Q2024. This increase is greatly due to the recent completion of the IOI Central Boulevard Towers (IOICBT). JLL notes that occupiers are coming to be more and more insusceptible to lease hikes amidst this uptick in vacancy. Leaving out the IOICBT, the CBD Grade A vacancy price would have remained relatively firm, akin to the post-pandemic low of 5.3% in 1Q2024.
The pushback in Shaw Tower’s conclusion from 2025 to 2026 will further exacerbate scarcity. “Occupants seeking to increase or relocate in 2025 only have one brand-new establishment to select from: Keppel South Central (0.6 million sq ft) in the Shenton Way and Tanjong Pagar sub-market. This minimal supply can move market dynamics back in landlords’ favour,” Tangye says.
Lumina Grand Bukit Batok West Avenue 5
He includes that the recent state judgment to not honor the Jurong Lake District Master Developer site and place the site back on the reserve list has caused a “more restricted expectation” for new workplace supply across Singapore. If this trend persists, it might result in tight office space source situations in the medium term, he adds.
Tangye expects overall CBD vacancy prices to remain elevated over the next couple of quarters as occupiers require time to transfer into their brand-new office spaces. Nevertheless, the actual physical availability of supply in some key office clusters continues to be restricted.
The environment gives chances for occupiers looking to update to first-rate units in high-quality buildings, says Tangye. “For instance, a substantial part of Meta’s previous room at South Beach Tower has been re-let or is currently in advanced arrangements,” he adds. The space has actually brought in attraction from occurring residents in the structure along with lessees moving from other CBD properties.
Dr Chua additionally anticipates business office rent out progress to “stay modest” throughout 2024, in front of an extra sturdy recovery in 2025 because of improved global economic conditions backed by reduced rate of interest and companies adapting to new work models and development approaches.
However, the global economic stagnation and the recurring delay in US interest rate cuts have actually affected demand. Andrew Tangye, head of office leasing and advisory at JLL Singapore, mentions that net take-up of office space has reduced as firms in Singapore come to grips with rising operating expense and activity caution involving capital investment. On top of that, office optimization has actually resulted in some renters lowering their business impact upon lease conclusion.
Gross effective rent for CBD Grade A workplaces in 3Q2024 remained unmodified at $11.50 psf each month (pm) in 3Q2024, according to information from JLL published on Sept 23. This adheres to a 0.7% q-o-q growth in 2Q2024, a downturn from the 1.4% q-o-q growth in 1Q2024.
Dr Chua Yang Liang, head of research and consultancy for JLL Southeast Asia, highlights that little and mid-sized occupiers in development fields including financial companies, professional solutions, and developing tech sectors have mainly driven workplace need over the past 12 months.
