Prime office rent in the Republic is expected to rise by 5 to 7 per cent in 2015, helped by the lack of new office space in the next two years, real estate services firm Knight Frank said on Wednesday (Dec 31).
Knight Frank said that while more firms in the technology, media and internet sectors are looking to relocate to prime office spaces, the amount of new office space coming onto the market next year is likely to fall to around 1.15 million square feet, down from 1.87 million square feet in 2014.
The estimated supply for 2016 is 1.60 million square feet, while 2017 will see the main bulk of new office supply of about 4.69 million square feet.
In view of the large upcoming supply of office space in 2017, landlords are asking for longer five- to six-year lease agreements instead of the traditional three-year lease for office space, Knight Frank said.
Knight Frank said Grade A plus offices in the Raffles Place and Marina Bay area now command rents of S$10.70 to S$13.40 per square foot per month – an increase of 6.9 per cent from a year ago.
In the Orchard Road area, office rents are currently between S$7.50 and S$10.50, a rise of 1.5 per cent from a year ago, while the going rate for offices at City Hall, Marina Centre and Suntec area is S$9.50 to S$11.30 – up just 0.9 per cent year-on-year.
As a result of the rising differential, new developments on the fringes of the central business district (CBD) have attracted interest from various tenants “due to the lower rents compared to core CBD, high quality building specifications with vantage views, less traffic congestion and more available space choices in these precincts”, Knight Frank said.
Source : Channel NewsAsia – 31 Dec 2014