Prime office rents rise 5.5% in Q1

20140408-st-prime-office-rents-rise-5.5-percent-q1-pic A LACK of new supply and increased demand amid a more upbeat business climate boosted prime office rents in the first quarter, said property consultancy Cushman & Wakefield yesterday.

The average grade A overall rent hit $9.90 per square foot (psf) per month - up 5.5 per cent over the previous quarter and the fourth straight quarter of increases.

It was also up 10.1 per cent on the same period a year ago.

Rents for offices in Raffles Place were the big mover, up about 10 per cent over the previous quarter to $9.90.

Marina Bay rent had the next highest jump - rising 9.3 per cent to an average of $12.90.

Newer buildings in Marina Bay can command even better prices, with average monthly effective rents coming in around $13 to $14 psf.

Cushman & Wakefield reported yesterday that positive market sentiment coupled with a limited supply drove the hike in prime rents.

The tightening of supply and sustained demand also sent the vacancy rate down 0.2 percentage point to 4 per cent for the first quarter.

Raffles Place again benefited the most, with vacancy rates down to 3.1 per cent compared with 4 per cent in the previous quarter.

The vacancy rates for Marina Bay, Shenton Way and Orchard stayed the same.

City Hall, however, saw vacancies rise to 1.2 per cent compared with 0.5 per cent in the previous quarter.

The leasing market also stayed active, with a healthy number of inquiries.

Mr Toby Dodd, Cushman & Wakefield's Singapore head, said: "We expect prime office rents in the CBD area to continue to rise over the next few quarters, supported by a moderate level of new supply this year and positive economic sentiments as the outlook of the global economy improves."

The sustained growth of global economic powerhouses the United States and Japan is also likely to benefit local service sector firms, which often take up large plots of office space.

Cushman & Wakefield expects the financial and insurance, information and communication and business services segments in particular to show continued stable growth and support the high demand.

But it noted that the completion of major office buildings in the later part of this year may weigh on the rents of older blocks.

Source: Straits Times, 8 Apr 2014