Grade A office rents in the CBD showed some growth in the first quarter of 2023, though q-o-q growth was slower compared to the last quarter, as per research by JLL. The real estate consultancy noted that gross effective rents in CBD Grade A office spaces grew 1.0% q-o-q to an average of $11.30 psf pm in 1Q2023, a tad lower than the 1.2% q-o-q growth in the prior quarter.

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Andrew Tangye, JLL Singapore’s Head of Office Leasing and Advisory, suggests that the slowed rate of growth could be attributed to macroeconomic uncertainty leading to large space users “pressing the pause button” on their plans. Occupancies in 1Q2023 revolved around smaller and medium occupiers with immediate needs, such as new market entrants or those requiring new workplace designs.

For instance, German insurer Munich Re leased two floors at 18 Cross Street, while fine wine merchant Corney & Barrow shifted to Hub Synergy Point.

Ying Tay, JLL Singapore’s Head of Research and Consultancy, states that despite the subdued demand, the limited availability of Grade A office spaces is enabling a few occupants to upgrade to better offices at new or upcoming projects. As an example, Guoco Midtown in the Bugis-Beach Road area, which received its Temporary Occupation Permit in January, has already secured tenants for around 80% of the space, with the rest being in advanced negotiations.

The Marina Bay financial district also sees high activity with around 45% of the space at IOI Central Boulevard Towers reportedly pre-committed or in the process of being contracted.

Unfortunately, the current macroeconomic environment is likely to maintain subdued demand for office spaces in the market. Backfilling of vacated places is expected to take a longer time than usual, thereby keeping the rent growth minimal in the near future, if at all.

However, Tangye believes the situation will improve in the post-2024 period, when the dip in new completions, along with the rising economic prospects, will accelerate rent growth. He advises occupiers, especially large space users, to seize this opportunity to rent spaces in high quality buildings.