Singapore prime office vacancies climb to highest since 2022 in July-Sept quarter but rents unchanged
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Vacancy rates for so-called Grade A offices in the central business district rose to 8.3 per cent in July-September.
ST PHOTO: ARIFFIN JAMAR
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Singapore – The prime office market in Singapore is showing signs of softening as an increase in new space pushes vacancies to the highest level in over two years, while a jump in rents runs out of steam.
Vacancy rates for Grade A offices in the Central Business District rose for the second consecutive quarter to 8.3 per cent in the July-September period, according to data released on Sept 23 by property consultancy Jones Lang LaSalle (JLL). That is the highest level since the first quarter of 2022.
Gross effective rent for the spaces was unchanged at $11.50 a month per sq ft compared with that of the previous three months, after a 0.7 per cent increase in the prior quarter, it said.
The rise in vacancies is largely driven by the opening of a new office building, IOI Central Boulevard Towers, which has about 1.26 million sq ft of office space.
But JLL said “global economic sluggishness” and a delay in US interest rate cuts have also impacted demand. The Federal Reserve slashed its benchmark rate by half a percentage point on Sept 18.
While Singapore’s office market has skirted the downturns experienced in other major cities worldwide, it has not been immune to the rate cut as key sources of demand for office space, including businesses in the finance and technology sectors, pull back.
Vacancy rates may remain elevated over the next few quarters as companies grapple with higher operating costs, Mr Andrew Tangye, head of office leasing and advisory at JLL Singapore, said in a statement.
While there remains interest in prime office space – Mr Tangye pointed to seven office floors totalling 115,000 sq ft at South Beach Tower given up by Meta Platforms being re-let or attracting negotiations from potential tenants – locations outside Singapore’s city centre have struggled in particular.
The authorities recently rejected a bid from a consortium of major developers to build a new business district in the west as the proposed price was too low. BLOOMBERG
