Grade A office rents in Singapore’s Central Business District (CBD) welcomed a 1.0% q-o-q increase in 1Q2023, despite this representing the second consecutive quarter of slowing growth. This is according to research by real estate consultancy JLL, with the gross effective rent for such spaces standing at $11.30 psf pm.

Andrew Tangye, JLL Singapore’s head of office leasing and advisory, attributes the modest growth to a cautious approach from large space users who have opted to “press the pause button” on expansion and relocation plans in light of macroeconomic uncertainties.

Tay Huey Ying, JLL Singapore’s head of research and consultancy, explains that despite the prevailing caution, occupiers are seizing the opportunity to upgrade to better office spaces in new and upcoming completions due to the tight supply of Grade A office space.

For instance, at Guoco Midtown in the Bugis-Beach Road area, 80% of space is already taken up with at least another 10% in advanced negotiations, while IOI Central Boulevard Towers in the Marina Bay Financial District is around 45% pre-committed or under negotiation.

Occupiers of these buildings come from a range of sectors, including financial services, Marina Gardens Condo technology, media, and professional services.

Outside of the CBD, Labrador Tower in Pasir Panjang Road has already seen 25% of its space pre-committed ahead of its completion in 2024. Prudential has taken up around 150,000 sq ft there, having secured a two-year extension to their 15-year lease at 51 Scotts Road due to expire in November 2024.

Given the continued macroeconomic environment, Huey Ying believes that office demand will remain subdued for the rest of the year, with talent forward-planning becoming key for large space users. She expects rent growth to remain modest until 2024, when a lack of new completions and a stronger economic outlook could see a return to more accelerated growth.

Tangye agrees that now is the ideal time for occupiers to lock in spaces in good quality buildings, believing that this could ultimately lead to higher rental growth post-2024.