Rents picking up for prime office space

20130917-st-rents-picking-up-prime-office-space-pic INCREASING numbers of firms looking for prime office space drove up average rents, which rose for the first time since the third quarter of 2011.

Average rent of prime grade A+ office space in Marina Bay and Raffles Place rose 1.4 per cent from July 1 to mid-September compared with the three months to June 30.

While the third quarter still has two weeks to run, the price lift is the first increase after seven consecutive quarters of negative or flat growth, said Knight Frank yesterday.

Gross effective monthly rents were between $9.90 and $12 per sq ft in the period to mid-September.

The indications are that leasing activity is growing in this quarter with firms anticipating a recovery in office rents after a quiet mid-year holiday period.

Ms Louise Toovey, Knight Frank associate director of office leasing, said in the report: "This is supported by an uptick in business sentiment as the economies in the United States and Europe showed emerging signs of recovery, coupled with a strong rebound in Singapore's economy last quarter."

She added that CapitaGreen, a new premium grade office development in Raffles Place, is ready for discussions with interested tenants with early pre-commitments and asking rents ranging from $13 to $14 per sq ft.

Rents for Raffles Place grade A office space - a different category from prime grade A+ office space - rose 0.6 per cent in the period to mid-September.

Knight Frank said asking rents are inching up as landlords want higher achievable rents for remaining office spaces.

The gross effective monthly rents for Raffles Place grade A office space range from $9.30 to $10.45 per sq ft. However, Ms Toovey noted: "Landlords of older buildings located further from MRT stations are starting to face greater challenge to fill up their vacated spaces."

Firms with a tighter budget can consider the Shenton Way, Robinson Road and Tanjong Pagar area, where average grade A office rents grew by 0.2 per cent in the period to mid-September and now range from $7.80 to $8.40.

The Tanjong Pagar area is also changing to include more residential and retail developments.

For example, 6 Shenton Way will convert some space to include a mall and serviced apartments.

Ms Toovey noted: "The Tanjong Pagar precinct is enhancing its attractiveness to offer amenities for both working and resident populace in the area."

Source: Straits Times, 17 Sep 2013