Grade A office rents in the Central Business District (CBD) of Singapore displayed slight q-o-q growth in the first quarter of 2023, though the figure was marginally lower than that of the previous quarter, reported JLL, a real estate consultancy. The gross effective rent for office spaces in the CBD reached an average of $11.30 psf per month in 1Q2023, up 1.0% from 4Q2022.

The waning figures, the second consecutive quarter of slowing growth, come as a result of the current macroeconomic uncertainties preventing large space users from expanding or relocating. Andrew Tangye, JLL Singapore’s head of office leasing and advisory, stated that these users had “generally pressed the pause button”, resulting in 1Q2023’s leasing activity being driven mainly by small-to-medium-sized companies with more immediate requirements.

At the same time, some companies have taken advantage of Grade A office spaces in new and upcoming completions. Examples include the German insurer Munich Re, who took up two floors at 18 Cross Street for its new office, and Corney & Barrow, who relocated to Hub Synergy Point.

In the Bugis-Beach Road area, Guoco Midtown, which came into possession of a Temporary Occupation Permit at the start of 2023, has retained 80% of its space, with negotiations for another 10% being held. Similarly, the Marina Bay financial district’s IOI Central Boulevard Towers is estimated to be 45% pre-committed or under advanced negotiation. This skyscraper is set for completion in 3Q2023.

In the Pasir Panjang area, Labrador Tower, due for completion in 2024, is already 25% pre-committed. Financial services company Prudential has taken up about 150,000 sq ft in the premises, with a 15-year tenure set to expire in 2024.

Given the current cautious outlook, Tay Huey Ying, JLL Singapore’s head of research and consultancy, believes that office demand will remain muted. However, this will not necessarily mean stagnation in rent growth, as Tangye predicts that, post-2024, the sharp dip in new completions and the strengthening of economic prospects will see acceleration in the figures. He concluded by recommending occupiers, especially those who are in need of larger space, to seize the opportunity and secure units in higher quality buildings.