Office rents up in Q3 but retail rents slip

Rents for offices and retail space went in opposite directions in the third quarter, reflecting the varied fortunes of the sectors.

It was good news for office landlords, with rent in the central region rising 2.5 per cent in the three months to Sept 30 over the second quarter, Urban Redevelopment Authority (URA) data noted yesterday.

But the rental index of retail space in the central region slipped 1.2 per cent from the second to the third quarter. This follows a 1.1 per cent decline from the first quarter to the second.

While the trend for retail looks to be going south, it is looking up for offices.

The 2.5 per cent gain was well ahead of the 1.6 per cent quarteron- quarter increase in the previous quarter.

However, prices of office space in the central region rose just 0.1 per cent in the third quarter, after lifting 1.9 per cent in the second.

There was a total supply of about 793,000 sq m gross floor area (GFA) of office space in the pipeline as at Sept 30, compared with 725,000 sq m in the previous quarter.

The amount of occupied office space increased by 45,000 sq m net lettable area (NLA) in the quarter compared with an increase of 74,000 sq m in the previous three months.

The stock of office space rose by 28,000 sq m NLA in the third quarter compared with an increase of 60,000 sq m in the previous one.

This meant the islandwide vacancy rate of office space eased to 12 per cent as at Sept 30 from 12.2 per cent as at June 30.

While retail rents are under pressure, the URA's price index of retail space in the central region rose 0.3 per cent from the second to the third quarter, after easing 1.3 per cent from the first to the second quarter.

There was a total supply of 501,000 sq m GFA of space from projects in the pipeline as at Sept 30, compared with the 498,000 sq m in the previous quarter.

The amount of occupied retail space decreased by 26,000 sq m NLA in the quarter, contrasting with an increase of 21,000 sq m in the second quarter.

The stock of retail space contracted by 11,000 sq m NLA in the third quarter against the increase of 10,000 sq m in the second.

This lifted the islandwide vacancy rate to 7.6 per cent as at Sept 30, from 7.3 per cent as at June 30.

A version of this article appeared in the print edition of The Straits Times on October 27, 2018, with the headline 'Office rents up in Q3 but retail rents slip'. Print Edition | Subscribe