For the third time in a row, premium and Grade A office rents in Singapore’s CBD (Central Business District) rose. In Q1 2022, they rose 1.5% per quarter to S$10.26 per square foot (psf), which is the fastest rate of growth since rents started to fall in Q3 2021. (Apr 11).
There was still a positive net absorption of 134,000 square feet in the CBD Premium and Grade A segment in Colliers’ quarterly report. The vacancy rate for this segment went down even more to 3.3% during the quarter.
Economic recovery and momentum for going back to work should help the office market get back on its feet. There are going to be a lot of people moving to better things this year, so the CBD Premium and Grade A segment is going to do well.
Colliers expects rents for this type of space to rise about 4% to 5% by the end of 2022. Before the next wave of space comes in 2023, there will be even less space available. That why it might be good to explore some grade A office outside CBD such as Labrador Tower which set to TOP in 2024.
The firm thinks that people who want to work in the future should start making decisions now, because landlords are getting more and more demanding.
On the investment side, the average value of this segment’s capital rose by 5.6% in the quarter, to S$2,850 psf. Net yields, on the other hand, fell by 0.1% to 3.4%.