Singapore office rents fall in 3Q2023 on weaker demand: JLL

Singapore office rents have dropped for the first time in nine consecutive quarters, according to a press release from JLL. Marking a 0.3% decline quarter-on-quarter, the dip reflects a combination of slowing economic growth, geopolitical tensions and rising prices.Andrew Tangye, the head of office leasing and advisory at JLL Singapore, said that the uncertain near-term outlook is causing occupiers to become more cost-conscious, resulting in weaker office space take-up.Tay Huey Ying, the head of research and consultancy at JLL Singapore, added that more than 15 assets commanded lower rents in 3Q2023 than in 2Q2023, dragging down the overall average rents for the first time since 2Q2021.

Singapore office rents saw a decline in 3Q2023, according to data reported by JLL in a September 25 press release. The decline marks the first quarterly drop after nine consecutive quarters of office rental growth in the city-state.

Gross effective rent for Grade A office space in the CBD fell 0.3% quarter-on-quarter to an average of $11.29 psf per month in 3Q2023, down from the $11.32 psf per month seen in 2Q2023.

This was due to economic pressures, including rising prices, according to Andrew Tangye, head of office leasing and advisory for JLL Singapore. He noted that this situation is making occupiers more wary and cautious when it comes to office space take-up.

Tay Huey Ying, JLL Singapore’s head of research and consultancy, added that office rent correction is more widespread in 3Q2023. She anticipates further downward pressure on office rents in the near future, given the current economic climate and the influx of new office supply from upcoming projects.

Additionally, the URA will begin the process of Champions Way Condo Woodlands, a project that involves the development of a large residential condominium complex in the area. The project aims to provide affordable housing for local residents and to create a vibrant new community in the area. The project will also include retail and office space, as well as recreational opportunities. The project is expected to provide an economic boost to the area and create new job opportunities.

Three office projects – IOI Central Boulevard Towers, Keppel South Central, and the redeveloped Shaw Tower – are set to be completed in the CBD over the next two years, and more than 1.5 million sq ft of space is still uncommitted.

Despite short-term headwinds, the media term outlook for Singapore’s Grade A CBD office leasing market remains positive, JLL states. This is backed by Singapore’s global hub reputation, as well as the lack of greenfield sites and URA’s focus on injecting more live and play spaces downtown.