: Occupancy levels across all major office micromarkets in Singapore rose in the second quarter, according to property consultant CB Richard Ellis (CBRE).
Occupancy levels at the Fringe CBD – which includes office buildings in Tanjong Pagar, Orchard Road and Beach Road/City Hall area – increased 0.7 percentage point on-quarter to a record 94.3 per cent.
Occupancy levels in the Core CBD – which covers Raffles Place, Marina Centre, Shenton Way and Marina Bay – went up by 0.2 percentage point on-quarter to 94.6 per cent, while those in the Decentralised micromarket rose 0.2 percentage point to 95.0 per cent.
“We expect that this may be a short-term phenomenon with vacancy levels – likely to rise in the next six to 12 months with a couple of major new developments coming on-stream and with more second-hand space hitting the market as a few large tenants relocate to new buildings in Marina Bay,” said Moray Armstrong, CBRE’s executive director of office services.
The vacancy rate of Grade A office stock rose from 5.6 per cent in the first quarter to 6.0 per cent in the second quarter.
While office rents continued to trend upwards in the second quarter, CBRE said the pace of rental increase has slowed.
Prime rents averaged S$8.80 per square foot per month in the second quarter, up 2.3 per cent on-quarter, but lower than the 3.6 per cent seen in the previous quarter.
Overall, prime rents rose 6 per cent in the first half of this year.
Grade A rents moved up 2.9 per cent on-quarter to S$10.6 psf/month in the second quarter.
CBRE said some 1.84 million square feet of commercial space could materialise from two newly listed parcels – Marina Bay and Paya Lebar – that were included in the Government Land Sales Programme for the second half of this year.
It added that about 8.4 million square feet of office space is targeted for completion from the second half of 2011 to 2015.
CBRE is optimistic of the demand for office space, with Singapore’s economic growth expected to be strong in both 2011 and 2012. However, it expects the increased supply to moderate the pace of rental growth.
Mr Armstrong added: “The quality, quantity and competitive cost of Singapore’s office space over other regional cities ideally position the city state to attract business.
“With global uncertainty lingering, the test is whether this will indeed boost office occupier demand and prove to be a winning formula.”
Source : Channel NewsAsia – 4 Jul 2011