Prime office rents in Singapore climbed for a fourth consecutive quarter, rising 3 per cent in the first quarter of this year from the previous three months as leasing stayed active, said JLL in a report earlier this week.
The increase brings average rents for Grade A office space in the Central Business District (CBD) to $9.51 per sq ft (psf) per month, according to JLL's preliminary estimates.
Rent growth was broad-based across all sectors, with the Marina Bay sub-market continuing to enjoy a competitive edge, it said.
The average monthly gross rent of Grade A office space in Marina Bay rose 3.3 per cent to $10.84 psf from $10.49 psf three months ago. The remaining sub-markets of Raffles Place, Shenton Way/Tanjong Pagar and Marina Centre posted rent growth ranging between 2.7 per cent and 3 per cent.
The 3 per cent rent growth in the first quarter is a slight moderation from the 4.3 per cent and 4.2 per cent on-quarter increases recorded in Q3 and Q4 last year respectively. This is likely due to the higher rental base, given that rents have recovered by a strong 12.7 per cent from their bottom in Q1 last year, said JLL.
Leasing momentum remained robust, with more than 60 per cent of the 0.8 million sq ft of net lettable space in Frasers Tower and 18 Robinson - the only two office developments due for completion this year in the CBD - estimated to be already pre-committed, said JLL.
According to JLL's research, the average vacancy rate of Grade A office space in the CBD has fallen sharply from the recent peak of 11.9 per cent in Q3 last year, to 8.1 per cent as of Q1 this year.
JLL Singapore's head of leasing Chris Archibold said: "We expect leasing demand to stay robust throughout 2018, driven by companies from a broad industry base looking to upgrade their premises. Co-working operators, in particular, are still bullish about demand and remain keen to set up new centres.
"However, as many of the large occupiers with lease expiry before 2019 have already locked in their accommodation, we expect leasing activity in 2018 to be dominated by smaller occupiers, or those with lease commencement dates more than 18 months away."
Ms Tay Huey Ying, the firm's head of research and consultancy, said Grade A office CBD average monthly gross rents, now at $9.51 psf, could potentially reach the last high of $10.56 psf recorded in Q1 2015 within the next 12 months, given the 10 per cent gap today.
She said: "Grade A CBD office average monthly gross rents have recovered 12.7 per cent over four quarters as of Q1 2018. This has been stronger than the rebound seen in 2013, wherein over a similar four-quarter period from the bottom, rents edged up only 7.4 per cent.
"Given that the market will be void of new Grade A supply in the CBD in 2019, the current rent recovery will have more legs and could possibly surpass the last in magnitude and length, barring the materialisation of downside risks such as a full-blown trade war between the United States and China."