The Marina Bay sub-market clocked the highest q-o-q growth in rents in 2Q2022 at 3.4%

The Grade A rents of offices in the CBD increased by 2.7% q-o-q in 2Q2022 to hit $10.74 per sq ft per month, according to an office report by JLL that was released in June. This is the fifth straight quarter of growth and is also the highest rise since rents retreated in the 2Q2021 period.

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Office rents have risen up to 0.6% below the pre-pandemic record of $10.81 per sq. ft as per JLL.

The solid performance in the quarter was backed by a rise in business confidence as well as the relaxed of safety management procedures, since employees were able to return to work on April 26.

“Expansions and new configurations outweighed the downsizing of workplaces which led to the 2Q2022 net absorbtion of CBD Grade A office space at 0.6 million square feetand the highest figure in 17 quarters, says Tay Huey Yang, JLL Singapore’s head for research and consulting. At the same time office vacancy rates decreased in 1.8 percent up to 6.8%.

It is worth noting that the Marina Bay sub-market clocked the largest increase in rents q-o -q in the 2Q2022 period at 3.4%, underpinned by the ongoing trend of a higher quality lifestyle which is driven by a rising importance placed on employee wellbeing and health.

Andrew Tangye, head of office leasing and advisory for JLL The increasing demand and the tightening of supply for high-quality CBD office space is causing more tenants to sign forward leases in order to secure the space and rents. The result was a rise in pre-commitment prices of Guoco Midtown, scheduled to be completed by in 2022 at the time of its completion as well as IOI Central Boulevard Towers, expected to be completed by the end of October 2023.

In the future, JLL expects office rents to continue to rise during the second quarter of the year. However, Tay warns that geopolitical as well as economic uncertainty could dampen demand and slow growth. However, due to the limited availability, she expects that rents could exceed the pre-pandemic high of $10.82 per square foot within the next quarter. Likewise, the full-year growth in rental could increase by more than that of the 4.3% clocked in 2021.

“Gross rents also are under pressure due to the rising costs of inflation faced with landlords.” Tangye adds.

On the front of capital markets the buoyant market for office leasing has maintained the demand for office assets despite global economic uncertainty, according to Ting Lim JLL Singapore’s director of the capital market.

Investors have invested an amount of $4.7 billion to Singapore office assets in the 1H2022 period which is just 8.6% short of the $5.2 billion committed for all of 2021. JLL notes the fact that office investment transactions in the 2Q2022 period are driven by the sale of assets that were not part of the CBD in a different direction from previous trends. The sum of $2.5 billion in office transactions involved assets located outside of the CBD and accounted for nearly 100% of all office investments in the quarter.