Mingtiandi

Asia real estate and outbound investment news

  • Facebook
  • LinkedIn
  • RSS
  • Twitter
Sign Up / Login Logout

Lost your password?
Register
Forgotten Password
Cancel

Register For This Site

A password will be e-mailed to you.

  • Capital Markets
  • Events
    • Mingtiandi 2023 Event Calendar
    • Mingtiandi APAC Residential Forum 2023
    • Mingtiandi Asia Logistics Forum 2023
    • Mingtiandi Hong Kong Focus Forum 2023
    • Mingtiandi APAC Data Centre Forum 2023
    • Mingtiandi Asia Office Strategies Forum 2023
    • Mingtiandi Singapore Focus Forum 2023
    • More Events
  • MTD TV
  • People
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail
  • Research & Policy
  • Advertise

Recovery Sighted as Singapore Grade A Office Rents Inch Upward in Q3

2021/10/09 by Christopher Caillavet Leave a Comment

One Raffles Quay Raffles Place SG

FTI Consulting’s lease in One Raffles Quay was one of the biggest deals of the quarter

A broad recovery is on the cards in Singapore’s office leasing market after a second straight quarter of growth for Grade A rents in the central business district, according to Cushman & Wakefield.

During the third quarter, Grade A office rents in Singapore’s CBD rose by 0.5 percent from the previous three-month period to reach an average of S$9.64 ($7.12) per square foot per month, as strong economic growth, continued occupier demand for quality offices and limited supply boosted the market, the property services firm said Thursday in a release.

Net absorption of CBD Grade A office space in the city-state remained positive for the second quarter in a row, reaching 215,000 square feet (19,974 square metres), fuelled by the relocations of law firm Lee & Lee, app maker Gojek and financial advisory FTI Consulting, among others.

“The recovery in net absorption was driven by flight to quality and tenant displacement demand from office towers planned for redevelopment,” said Wong Xian Yang, head of research for Singapore at Cushman & Wakefield. “Examples include Red Hat and FTI Consulting, which are relocating from AXA Tower to CapitaSpring and One Raffles Quay South Tower respectively. Moreover, technology and finance occupiers have continued to expand their headcounts, driving up demand for Grade A office spaces.”

Vacancy Rate Climbs

Growth in CBD Grade A rents was led by Marina Bay, where rates rose 1.6 percent from the second quarter to S$11.31 per square foot per month, followed by Raffles Place (up 0.3 percent at S$9.57) and Shenton Way/Tanjong Pagar (up 0.1 percent at S$9.50).

Wong-Xian-Yang

Wong Xian Yang of Cushman & Wakefield

While net absorption in the year to date hit 283,000 square feet, up from 183,000 square feet during the same period in 2020, the net supply of available space remains elevated, with the vacancy rate climbing to 5.8 percent in the third quarter from 4.6 percent in the prior three months.

Raffles Place saw the highest vacancy rate of 8.8 percent among Grade A CBD submarkets, while City Hall/Marina Centre recorded the lowest at 3.9 percent. A substantial amount of Grade A vacant space is currently under negotiation and is likely to be snapped up over the next few months, Cushman & Wakefield said in its Marketbeat report.

Aside from FTI Consulting’s deal for 12,900 square feet at One Raffles Quay South Tower, large leasing transactions in the third quarter included Lee & Lee signing up for 30,500 square feet at 25 North Bridge, just across the street from the Supreme Court; Gojek Singapore taking up 23,900 square feet at Suntec Tower 5; and Riot Games Publishing renting 13,000 square feet at Marina One West Tower.

In its own third-quarter report, Colliers noted that employment-oriented social network LinkedIn leased a further 22,000 square feet of office space at Marina Bay Financial Tower 2.

Additionally, the Business Times reported in August that IBM’s Red Hat software division and Japan’s Sumitomo Mitsui Banking Corporation were respectively leasing 60,000 and 68,800 square feet at CapitaSpring, the soon-to-open $1.3 billion mixed-use project in Raffles Place.

Betting on Downtown

Cushman & Wakefield remarked that recoveries in Singapore’s office market have historically been led by an uptick in CBD Grade A rents.

“We are generally optimistic about the office market outlook, as Singapore remains a very attractive business destination, particularly among financial services and tech firms, Chinese companies, family offices as well as growth sectors such as healthcare and life sciences,” said Mark Lampard, executive director and head of Singapore commercial leasing at Cushman & Wakefield. “These sectors will remain the key drivers of office space demand for the rest of the year, going into 2022.”

In terms of capital investment, the largest sales transaction for an office property in the third quarter was financial management startup Rivulets Investments’ purchase of 61 Robinson Road from ARA Asset Management for S$422 million ($314.5 million).

The building halfway between Raffles Place and Tanjong Pagar changed hands at the equivalent of S$2,973 per square foot, with the total compensation representing a more than 24 percent premium to what ARA paid to acquire the property from Homax Pte Ltd, a private company controlled by the family of Taiwanese billionaire Tsai Tseng-yu.

The largest office strata transaction of the quarter was the sale of three units in the GB Building at 143 Cecil Street in Tanjong Pagar for S$52.06 million ($38.5 million). The deal involved a total strata area of 31,086 square feet, comprising the retail podium on the first and second levels (13,067 square feet) and two full-floor office units: the third level (12,594 square feet) and eighth level (5,425 square feet).

In its recent report on Singapore’s office market, JLL predicted that demand for Grade A CBD office space would average 600,000 square feet a year between 2021 and 2025.

“While this is 25 percent below the 0.8 million square feet that the market recorded in the 10 years between 2011 and 2020, it is 20 percent above the 0.5 million net new supply we foresee entering the market per annum from 2021 to 2025,” the property consultancy said.

Share this now

  • LinkedIn
  • Share
  • Tweet
  • Email

Filed Under: Research & Policy Tagged With: Cushman & Wakefield, daily-sp, Featured, office leasing, Singapore

Leave a Reply

Your email address will not be published. Required fields are marked *

Get Mingtiandi Delivered

MTD TV

SDAX Ties Up With ESR $1.5B Asia Data Centre Fund: MTD TV
new economy panel office forum thumbnail
Allianz, Benoy, JLL, Asia Green Tackle the New Economy’s Impact on Office Markets: MTD TV

More MTD TV Videos>>

People in the News

Liu Weiliang Zhenro
Asia Real Estate People in the News 2023-01-23
Paul Davis JLL
JLL Hires Paul Davis, Shai Greenberg to Lead Japan International Capital Division
Craig Pearce Nikota Capital
Japan’s Nikota Capital Launches Real Estate Brokerage Arm
Eric Gan FHT
Frasers Promotes Eric Gan to FHT CEO as Eu Chin Fen Takes Over Hospitality Division

More Industry Professionals>>

People in the News

Asia Real Estate People in the News 2023-01-23

Liu Weiliang Zhenro

An ailing mainland developer leads this week’s set of personnel moves from around Asia, as a new chairman takes over at … Read More>>

JLL Hires Paul Davis, Shai Greenberg to Lead Japan International Capital Division

Paul Davis JLL

JLL has beefed up its Japan capital markets team with the hiring of Paul Davis and Shai Greenberg to serve as co-leads … Read More>>

Japan’s Nikota Capital Launches Real Estate Brokerage Arm

Craig Pearce Nikota Capital

Tokyo-based Nikota Capital has established Nikota Realty as a real estate brokerage division to help individual … Read More>>

Frasers Promotes Eric Gan to FHT CEO as Eu Chin Fen Takes Over Hospitality Division

Eric Gan FHT

Following the failed privatisation of Frasers Hospitality Trust last September, sponsor Frasers Property has made a … Read More>>

More Industry Professionals>>

Latest Stories

Ismail Gafoor of PropNex Realty
Singapore Home Price Growth Eases to More Than Two-Year Low as Sales Slide
Frasers Group JV Buys Half-Stake in Mercatus Singapore Mall for $497M
Sonny Kalsi BentallGreenOak
BentallGreenOak Buying Landmark Osaka Hotel for Reported $385M

Sponsored Features

Malls and Megaprojects from Hong Kong to Beijing Triumph at PropertyGuru Awards Show
Thomasin Crowley, WiredScore
Fit for the Future: Retrofitting Hong Kong’s Ageing Office Stock
Vlinker CEO Vic Zhou
Vlinker Unveils 3,000 Apartments in Multifamily Boost for Shanghai’s Minhang District

More Sponsored Features>>

Connect with Mingtiandi

  • Facebook
  • LinkedIn
  • RSS
  • Twitter

Real Estate News

  • Capital Markets
  • 2022 Event Calendar
  • MTD TV Archives
  • People
  • Logistics
  • Data Centres
  • Asia Outbound
  • Retail

More Mingtiandi

  • About Mingtiandi
  • Contact Mingtiandi
  • Mingtiandi Membership
  • Newsletter Subscription
  • Advertise
  • Terms of Use
  • Privacy
  • Join the Mingtiandi Team


© 2007-2023 China Advertising Media Ltd (Samoa). All rights reserved.

  • This field is for validation purposes and should be left unchanged.