Rents for business parks in the city fringe in Singapore are projected to rise as more companies seek out business parks with Grade A office specifications in a bid to cut their real estate costs.

In the third quarter of this year, their rents stood at $5.91 per square foot (psf) per month, up 0.2 per cent quarter on quarter and 2.4 per cent from a year ago, according to data from real estate services company Cushman & Wakefield.

Another factor in the shift to business parks is the number of corporates with a large proportion of employees working from home, resulting in less need for Central Business District (CBD) office space, said Ms Christine Li, its head of research for Singapore and South-east Asia.

"The movement towards business parks with Grade A specifications along with the continued moderation of Grade A CBD rents will further narrow the rental gap between CBD office and city fringe business park space over the next few quarters."

This trend is expected to reverse after Grade A CBD rents fall by a projected 20 per cent next year and become more affordable. However, rents for business parks in outlying areas will slide due to their older stock. Rents in the third quarter stood at $3.64 psf per month.

Another bright spot is the prime logistics segment, where rents are expected to rise due to a strong preference for ramp-up facilities. In the third quarter, the rents rose by 1.5 per cent on the quarter.

THE BUSINESS TIMES