The rebound in the prime office market was also seen in the occupancy rates for prime office in the Raffles Place and Marina Bay precinct.
SINGAPORE (EDGEPROP) - An office market report by Knight Frank found that in the last quarter prime grade office rents in the Raffles Place and Marina Bay precinct grew for the first time since 4Q2019. Rents in this prime area rose 0.2% q-o-q to $9.98 psf per month (pm).
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The rebound in the prime office market was also seen in the occupancy rates for prime office in the Raffles Place and Marina Bay precinct. The occupancy rate marginally fell by 0.7 percentage points q-o-q to 93.6%, a slight reversal from the o.1 percentage point gain in 2Q2021.
The Knight Frank report says that the volume of pre-termination office space available also declined 78.9% q-o-q in 3Q2021. It fell from about 360,000 sq ft in 2Q2021 to about 76,000 sq ft in 3Q2021.
According to the report, this decrease in the amount of shadow office space was expected as occupiers continue to adopt a flight-to-quality attitude. Corporate tenants are taking advantage of the rare opportunity to snap up premium office space in prime buildings that are usually fully occupied, before office rents start to significantly increase.
Some co-working operators were back on the expansion path as they anticipate a growing demand for flexible workspaces in the future remote working era.
For example, The Executive Centre opened its flagship, 38,736 sq ft location at at One Raffles Quay North Tower in August. Meanwhile, The Great Room is set to open its new 37,000 sq ft location in the upcoming Afro-Asia I-mark building.
Demand for new office supply is also strong with more than 90% of the office space at CapitaSpring already pre-committed or in advanced negotiations.
The report says that corporate tenants and office landlords are increasingly optimistic about Singapore’s office sector and are at the moment unphased by the rising Covid-19 case numbers. Knight Frank expects office rents will improve by 1% to 2% q-o-q in 4Q2021, and the office rental market could rise by 5% for the whole of 2022.