Singapore's office rental market ends 2013 on positive note

The office rental market in Singapore showed signs of picking up in the last quarter, as occupancies and rentals were higher than the year before.

The average monthly gross rents of Grade A office space in the Central Business District (CBD) climbed 2.1 per cent from the third quarter to reach $9.75 per sq ft (psf) a month at the end of December, according to data from property consultancy CBRE.

Grade A offices comprise the best-quality buildings in Raffles Place, Marina Bay and Marina Centre.

Monthly rents of Grade B offices - which refer to older or smaller office blocks - also climbed 2.1 per cent to $7.25 psf in the same period.

The rise in rents came on the back of more demand for offices in the fourth quarter. Across the island, the rate of office vacancies dipped by 0.74 percentage points to 4.4 per cent in the three months to Dec 31.

That marked a new low since the second quarter of 2008, CBRE said.

The consultancy noted that firms had taken up a significant amount of office space in the CBD in the last quarter. Mizuho Bank leased 110,000 sq ft of space at Asia Square Tower 2 and online reservation portal Booking.com occupied 45,000 sq ft at the Marina Bay Financial Centre Tower 3.

Mr Moray Armstrong, executive director of CBRE's office services, said: "Most enouraging was the significant uptick in leasing activity in the CBD, with particular focus on the Grade A sector.

"This comprised some relocation activity spurred by opportunities to upgrade, but also included very concrete expansion requirements."

The Government's push towards decentralisation has also resulted in an uptick in demand for suburban office space in the last quarter.

At Jem in Jurong East, 315,390 sq ft of office space was let out to the Ministry of National Development, while more than 90 per cent of the Metropolis Tower 2 in the One-North precinct has been taken up before its opening.

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