Rents for CBD Grade-A offices rose 3% q-o-q to $9.51 psf in 1Q2018, in the fourth consecutive quarter of positive growth, based on JLL's preliminary estimates. If the trend continues, rents could reach the previous peak of $10.56 psf (as recorded in 1Q2015) within the next year, according to Tay Huey Ying, JLL head of research and consultancy.
Prime office rents have recovered a total of 12.7% since the bottoming out of the market in 1Q2017, according to JLL. The last upcycle in the office rental market in 2013/14 lasted nine quarters, when prime office rents surged a cumulative 23.2% before declining in 2Q2015.
Tay reckons the current rental recovery could surpass the last in magnitude and length, barring external shocks. “The market will not see new Grade-A supply in the CBD in 2019, while Frasers Tower and 18 Robinson – the two schemes scheduled for completion this year – are more than 60% pre-committed”, Tay adds. The lack of new stock will continue to put upward pressure on rents, she explains.
Prime office rents have recovered a total of 12.7% since the bottoming out of the market in 1Q2017, according to JLL (Credit: Samuel Isaac Chua/The Edge Singapore)
Marina Bay was the best-performing sub-market in 1Q2018; rents rose 3.3% q-o-q to $10.84 psf. The remaining CBD sub-markets at Raffles Place, Shenton Way/Tanjong Pagar and Marina Centre, saw 2.7 to 3.0% rent growth.