SINGAPORE • When it comes to renting an office in downtown Singapore, the tables have turned.
Landlords now have the upper hand in rental negotiations, with leasing rates in the city-state’s prime business districts rising at the steepest pace in more than four years. And with both demand accelerating and supply dwindling, rents are forecast to remain firm until at least 2022 when new supply is expected to come into the market.
An index published by the Urban Redevelopment Authority that tracks rents for Singapore’s central area rose by 3% in the three months ended Sept 30 from the previous quarter, the biggest jump since the June quarter of 2014. Grade A office rents are expected to rise by 11% this year and 9% in 2019, according to Cushman & Wakefield Inc.
“Rising rents and shrinking leasing opportunities are driving a growing number of occupiers to explore the option of maintaining a small presence in the central business district (CBD) while locating the rest of their operations outside,” said Tay Huey Ying, head of research and consultancy for Singapore at JLL. “Offices outside the CBD can look forward to enjoying spillover demand.”
According to JLL, average monthly rents for grade A offices in the CBD are already up more than 18% from their recent low of S$8.41 (RM25.41) per sq ft in the first quarter of 2017 (1Q17). Overall office rents in the CBD have gained 12% since 2017, but are still 8.5% below the peak set in 1Q15. — Bloomberg