Rents picking up for prime office space

[reporter2]

http://www.straitstimes.com/archive/...space-20130917

Rents picking up for prime office space

First rise since Q3 of 2011 as more firms hunt for spaces in top precincts

Published on Sep 17, 2013

By Rachael Boon


INCREASING numbers of firms looking for prime office space drove up average rents, which rose for the first time since the third quarter of 2011.

Average rent of prime grade A+ office space in Marina Bay and Raffles Place rose 1.4 per cent from July 1 to mid-September compared with the three months to June 30.

While the third quarter still has two weeks to run, the price lift is the first increase after seven consecutive quarters of negative or flat growth, said Knight Frank yesterday.

Gross effective monthly rents were between $9.90 and $12 per sq ft in the period to mid-September.

The indications are that leasing activity is growing in this quarter with firms anticipating a recovery in office rents after a quiet mid-year holiday period.

Ms Louise Toovey, Knight Frank associate director of office leasing, said in the report: "This is supported by an uptick in business sentiment as the economies in the United States and Europe showed emerging signs of recovery, coupled with a strong rebound in Singapore's economy last quarter."

She added that CapitaGreen, a new premium grade office development in Raffles Place, is ready for discussions with interested tenants with early pre-commitments and asking rents ranging from $13 to $14 per sq ft.

Rents for Raffles Place grade A office space - a different category from prime grade A+ office space - rose 0.6 per cent in the period to mid-September.

Knight Frank said asking rents are inching up as landlords want higher achievable rents for remaining office spaces.

The gross effective monthly rents for Raffles Place grade A office space range from $9.30 to $10.45 per sq ft. However, Ms Toovey noted: "Landlords of older buildings located further from MRT stations are starting to face greater challenge to fill up their vacated spaces."

Firms with a tighter budget can consider the Shenton Way, Robinson Road and Tanjong Pagar area, where average grade A office rents grew by 0.2 per cent in the period to mid-September and now range from $7.80 to $8.40.

The Tanjong Pagar area is also changing to include more residential and retail developments.

For example, 6 Shenton Way will convert some space to include a mall and serviced apartments.

Ms Toovey noted: "The Tanjong Pagar precinct is enhancing its attractiveness to offer amenities for both working and resident populace in the area."

[email protected]

[reporter2]

http://www.businesstimes.com.sg/arch...se-q3-20130917

Published September 17, 2013

Prime office rents reverse decline with 1.4% rise in Q3

Agents report 'flight to quality' from older, less accessible buildings

By Mindy Tan [email protected]


PRIME office rents crept up in Q3 amid higher leasing enquiries, a report released by Knight Frank showed yesterday.

Reversing seven consecutive quarters of negative or flat growth, prime Grade A+ rents in Marina Bay and Raffles Place posted an increase of 1.4 per cent quarter-on-quarter, hitting between $9.90 and $12.00 per square foot (psf).

In this sub-segment, smaller office spaces remained in high demand from a larger pool of prospective tenants. These include smaller companies who were previously situated in serviced offices and are shifting back into traditional office space.

The latest premium Grade A office development to hit the market, CapitaGreen, is now open for discussion with interested tenants for early pre-commitments. Asking rents range from $13 to $14 psf.

Other Raffles Place Grade A office rents, too, edged up 0.6 per cent quarter-on-quarter, to between $9.30 and $10.45 psf, even as occupancy levels stabilised.

Despite climbing rents, a 'flight to quality' is causing landlords of older buildings located further from MRT stations to encounter more difficulty in filling up their vacated spaces, noted Louise Toovey, associate director of office leasing at Knight Frank.

Alan Cheong, Savills Singapore's head of research, agreed, pointing out that the spread between top-quality buildings which are almost fully occupied and older stock with higher vacancy rates is widening.

Outside of the Central Business District (CBD), Orchard Road's average office rents for Grade A space rose 3.1 per cent year-on-year, bolstered by rising asking rents for smaller office spaces.

Compared with the last quarter, Orchard's average office rents inched up 0.6 per cent, reaching between $7.00 and $10.90 psf.

In the Suntec/Marina Centre/City Hall area, average rents held firm, rising 0.5 per cent quarter-on-quarter. Asking rents for office space in Suntec City are starting to rise, with major refurbishment works for the retail podium on track for completion by early 2014, noted Knight Frank.

Meanwhile, rents in the Beach Road/Middle Road cluster dipped 0.4 per cent drop quarter-on-quarter, its third consecutive rental decline.

Knight Frank singled out Buona Vista as a "rising bright spot in the western fringe area", which has been boosted by the impending completion of the Metropolis. Demand for office space in its twin towers has been strong, and office rents for the remaining spaces are expected to hit $7 psf, comparable to average rents in Mapletree Business City, noted Ms Toovey.

With Metropolis Tower 1 undergoing fitting out works, Tower 2 slated for completion by year-end and a wider business community made up of the shipping, oil and gas, fast-moving consumer goods and financial-related trades taking shape, Buona Vista's appeal as an up-and-coming business hub in the western region will be heightened, she added.

Knight Frank expects overall rents to creep up by around 0.3 per cent quarter-on-quarter in Q4, buoyed by improving business sentiment, rising rent expectations from landlords, and the addition of new office developments. Average rents in the CBD are likely to stay firm or notch up modest increases of 0.2 to 0.3 per cent in Q4.

[Centennial Business]

Yes, real estate is the driving force in the economic turnaround. I am surprised, though, that it showed up in 2011.