SINGAPORE - Premium office rents rose in the second quarter - the first increase in nine quarters, according to Cushman & Wakefield.
Grade A central business district rents rose 1.7 per cent from the first quarter to $8.51 per square foot per month.
The rebound was led by take-up in Marina Bay, where rents surged 5.8 per cent, a reversal from the first quarter, where rents in the Marina Bay area were down 1 per cent.
They were driven mainly by a healthy take-up rate for the new office towers at Marina One, which are believed to be about 70 per cent leased ahead of completion.
Raffles Place rents edged up 2.5 per cent for the second quarter, compared with a decline of 1.9 per cent for the first quarter.
The figures suggest a turnaround in the office rental market.
According to first-quarter figures from the Urban Redevelopment Authority, overall office rents fell by 3.4 per cent from the last quarter of 2017, while vacancy rates went up by 0.5 percentage points to 11.6 per cent. Second-quarter figures will be out later this month.
However, Cushman & Wakefield noted that rents for city fringe and suburban offices continued to decline, with city fringe offices posting a 0.6 per cent fall, while suburban office rents fell by 0.2 per cent.
Ms Christine Li, director of research at Cushman &Wakefield, said demand for space in the second quarter had largely been driven by technology, media and telecommunication industires, as well as the financial and professional services sectors.
"Leasing demand is supported by a flight to quality trend as tenants seize the opportunity to lock in long leases at attractive rental rates," she said, adding that tech companies are "typically more inclined towards centrally located offices in the central business district" to attract a millennials.
She projected a gradual rent recovery of up to 5 per cent this year, "due to the much depleted supply situation from 2018 and beyond, as well as because of sustained GDP growth."