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Office occupancy levels decline with only 30% back in offices: Savills Singapore

By Valerie Kor

/ EdgeProp Singapore |

December 1, 2020 3:00 PM SGT

SINGAPORE (EDGEPROP) - Grade A CBD offices in Singapore saw occupancy levels decline from 94.3% in 2Q2020 to 93% in 3Q2020, according to a Savills forecast report on prospects for office occupation in key global cities in 2021.

This could be due partly to tenants giving up shadow space upon lease renewals, or pre-terminating as a result of business closures.

Additionally, although the government has permitted 50% of a company’s workforce to return to the office in certain sectors that occupy space in the CBD, many offices have just 30% of their headcount back, notes Alan Cheong, executive director, research & consultancy at Savills Singapore.

The employees who have returned to work are separated to work from alternate locations, leading to increasing demand for regional office space, of which there is a limited supply as a result of construction delays. The tight supply will help to shore up near term rents, says Cheong.

Read more: Redefining the workplace

Currently, headcount requirements for 2021 and 2022 are uncertain, with many MNCs based in the northern hemisphere deferring their corporate real estate plans until spring.

Landlords in Singapore have become more accommodating in recent weeks, allowing short-term lease renewals of two years instead of the typical three to five years. However, rents in Singapore have yet to show significant declines. Savills expects that rents of Grade A offices in the CBD will settle down at a lower baseline and vacancy rates will increase.

Tags:

office Savills Singapore Grade A offices CBD Office forecast tenants alan cheong landlords employees

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