Office vacancy rates down in Q1

Vacancy rates of Grade A office buildings in the central business district (CBD) declined at a slower pace to 6.5 per cent in the first quarter this year.

This compared to the 6.8 per cent fall in the fourth quarter of last year.

According to property consultancy Savills Research in its latest report on the office sector on Friday, the leasing market has been dominated by enquires from small- to medium-sized office space users.

Grade A monthly rents averaged S$8.58 per sq ft in the first quarter this year, a 1.7 per cent decline from the previous quarter.

Savills Research’s director Alan Cheong said: “Demand from investment banking institutions have tailed off. On the other hand, MNCs in the oil & gas, commodities and natural resources sector together with banks specialising in wealth management have continued expanding.”

Still, companies are expected to remain cautious in the year ahead.

Increasing volumes of vacant space will inevitably put pressure on Grade A rents, which are expected to continue trending downwards in the next few quarters.

Savills expects that, after factoring in new supply and possible shadow space, vacancy rates are likely to rise between 9 and 11 per cent by the end of 2012.

Source : Channel NewsAsia – 13 Apr 2012

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