_Singapore: Continued recovery of prime grade office rents with office space availability declining

The office market showed continued signs of recovery in the fourth quarter of 2017, with active leasing activity gathering pace.

Calvin Yeo February 01, 2018

Overall prime rents (Grade A+ and A in Raffles Place / Marina Bay) rose by 1.5% year-on-year in Q4 2017. Space availability for lease in most precincts saw a decline, with tenants from various industries signing up spaces in Q4 2017. Landlords of Grade A+ office buildings are gradually adjusting rents upwards in view of the limited new supply of prime offices coming on stream until 2020.

Exhibit 1: Average Office Rentals, by Key Precincts in Q4 2017

Source: Knight Frank Office

The ‘flight to quality and efficiency’ supply-led demand for prime office space that was dominant in 2017 is expected to continue in 2018. Tenants are relocating to larger and more efficient floor plates to fulfil their evolving operational requirements, over less and / or scalable office space through various activity-based workplace solutions. Prime office rents are expected to rise by at least 8.0% to 12.0% year-on-year by Q4 2018.

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