Results 1 to 2 of 2

Thread: Raffles Place Q4 office rents slide 15.8%: DTZ

  1. #1
    mr funny is offline Any complaints please PM me
    Join Date
    May 2006
    Posts
    8,129

    Default Raffles Place Q4 office rents slide 15.8%: DTZ

    http://www.businesstimes.com.sg/sub/...12833,00.html?

    Published January 6, 2009

    Raffles Place Q4 office rents slide 15.8%: DTZ

    Poor demand, more space seen lowering occupancy rates, rents in 2009

    By UMA SHANKARI


    (SINGAPORE) Prime office rents in Raffles Place sank 15.8 per cent quarter-on-quarter (qoq) in the final three months of 2008 to an average of $16 per square foot per month (psf pm), representing the first decline since Q4 2003, according to DTZ Research.

    The drop was the biggest among the micro markets tracked by DTZ. Office rents in the Marina Centre micro market also fell a hefty 12.9 per cent qoq to $13.50 psf pm.

    'While the low level of new office supply supported rents in the first nine months of 2008, the market began to favour occupiers in Q4 as demand fell,' DTZ said. 'Landlords have lowered their asking rents and are offering attractive incentives to retain existing tenants and attract new ones.'

    Office vacancies edged up further in Q4 2008 as demand dwindled. Except for Tampines Finance Park, where occupancy remained at 96.8 per cent, occupancy in all other micro markets declined.

    In Raffles Place, the average office occupancy fell 1.3 percentage points qoq to 95.6 per cent in Q4 2008. Island-wide, office occupancies slid 0.8 of a percentage point qoq to 95.6 per cent, as new supply was added and demand weakened as companies shelved expansions, cut back on space needs or shifted to cheaper locations such as high-tech industrial space or converted state property.

    DTZ said that shadow space is beginning to surface as occupiers dispose of excess space, although the amount available for occupation in Q4 2008 was still insignificant, at about one per cent of total vacant office space island-wide.

    In response to falling demand, there has been a cutback in new office supply - but not enough to ease an impending glut as most major projects are already under construction, DTZ noted. Deferred developments totalling about 872,000 sq ft of new office space include South Beach, office extensions at Tampines Mall and Funan DigitaLife Mall and the redevelopment of Marina House. DTZ puts potential office supply from 2009 to 2013 at 11.3 million sq ft, compared with an earlier estimate of 12.1 million sq ft.

    DTZ said that in view of the deteriorating global financial situation and the large amount of new office space coming on stream in Singapore this year, occupancy rates and rents are expected to decline further in 2009.

    The firm also noted that sentiment in the industrial property market has soured, as the manufacturing and office sectors continue to weaken. Rents for private conventional industrial space declined in Q4 2008 for the first time since Q3 2003.

    Rents for first-storey and upper-storey private industrial space dipped 2.1 per cent and 2.4 per cent respectively qoq to $2.30 and $2 psf pm. Rents for hi-tech industrial property slid 4.4 per cent qoq to $4.30 psf pm - the first decline since Q2 2004.

  2. #2
    mr funny is offline Any complaints please PM me
    Join Date
    May 2006
    Posts
    8,129

    Default

    http://www.todayonline.com/articles/295816.asp

    Tuesday, January 6, 2009

    A tenants’ market downtown

    A 30-per-cent fall in rental market expected this year

    ESTHER FUNG

    [email protected]


    TENANTS for office space are beginning to enjoy more bargaining power as increased supply for such commercial property and a weakening economy drive rents lower.

    This is good news for business owners such as Mr Hu Yinghan. Mr Hu, who runs an events company Apesnap in Chinatown, will be asking for much lower rent when his lease runs out at the end of the year.

    “I shouldn’t have locked in last year,”Mr Hu told Today, adding he hoped to get a 30-per-cent discount from the $4 per square foot (psf) per month he is currently paying.

    His wishes are likely to come true, if the forecast of seasoned property consultant Colin Tan proves to be accurate.

    Mr Tan, head of consultancy and research at Chesterton Suntec International, said that the office rental market would face a sharp decline of about 30 per cent this year.

    “For now, some landlords may not feel the pressure because they still have healthy occupancy. There’s a time lag with administrative procedures,” said Mr Tan, who added that most landlords would feel the pain by the middle of the year.

    “Last year, some landlords may have been too greedy and taken advantage of the situation to squeeze the market,” said Mr Tan. “Now it’s facing shrinking demand and everyone’s locked in. There will be a lot more vacant space.”

    And it’s not just small business owners who stand to benefit from the lower rents.

    Prime office rents in Raffles Place fell last quarter, the first decline since the fourth quarter of 2003. Tenants there paid an average$16 psf per month in the last quarter, representing a 3-per-cent drop from the corresponding period a year earlier, said property consultants DTZ Research.

    Grade A office market rents hit as high as $20 psf per month last year, but the office rental market is now turning into a tenant’s market, DTZ Research said.

    In the last quarter, more offices became vacant as companies braced themselves for tough economic times by freezing headcount, reducing space needs, shelving expansion plans, as well as moving to cheaper locations outside the CBD. This resulted in office occupancy rates dropping by 2.6 percentage points to 95.6 per cent in Raffles Place, compared to the same period a year ago, said DTZ Research.

    Analysts are predicting that prime office rents in the Central Business District (CBD) will dip to between $10 and $12 psf per month.

    With the economy expected to remain weak, landlords who have been used to dictating terms now find themselves having to offer attractive lease incentives to retain existing tenants and secure new ones, they said. These include lease packages with rent-free intervals so that the overall effective rates are lower.

    Although there have been some cutbacks on new office supply following weaker demand from recession-hit businesses, it does little to ease the impending supply glut, said analysts.

    Potential office supply from 2009 to 2013 is now 11.3 million sq ft, just slightly down from the previous estimate of 12.1 million sq ft, said DTZ Research.

    DTZ’s executive director, Ms Cheng Siow Ying, said: “More shadow space is likely to emerge, a lagged effect following retrenchments.”

    More pockets of office space would become available when companies start relocating from their existing premises to pre-committed space in transitional offices and business park developments that will be completing this year,” she added, citing Citigroup’s move to Changi Business Park as an example.

    To compound the oversupply, on top of the 3 million sq ft of new office space to be added islandwide this year, there could be an additional 1 million sq ft vacated by troubled companies as the recession deepens, Chesterton’sMr Tan estimates.

    The retail rental market is also facing pressure. CBRE said that prime retail rents in Orchard area fell 1.9 per cent to an average of $36.10 psf per month in the fourth quarter last year, the first time these rents have headed south since 2003.

    In the same period, rents of private industrial space also saw its first decline since 2003, said DTZ Research. Private industrial rents dipped by about 2 per cent quarter-on-quarter between $2 and $2.30 psf per month.

Similar Threads

  1. CBD office rents continue slide
    By reporter2 in forum HDB, EC, commercial and industrial property discussion
    Replies: 0
    -: 08-04-16, 19:27
  2. Raffles Place's office rents catching up with Marina Bay's
    By reporter2 in forum HDB, EC, commercial and industrial property discussion
    Replies: 0
    -: 07-12-15, 16:46
  3. GSH bullish about sale of office units in Raffles Place
    By reporter2 in forum HDB, EC, commercial and industrial property discussion
    Replies: 0
    -: 14-04-15, 15:54
  4. Raffles Place office building up for grabs floor by floor
    By mr funny in forum HDB, EC, commercial and industrial property discussion
    Replies: 0
    -: 22-11-10, 17:29
  5. Raffles Place rents almost double in just one year
    By mr funny in forum HDB, EC, commercial and industrial property discussion
    Replies: 0
    -: 21-06-07, 17:36

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •