City Hall commands S$9.82 psf, ranking second in micro-market Grade A CBD Office rents this quarter.
Savills Research reports that the City Hall micro-market registered the largest quarter-on-quarter (QoQ) rental growth of 1.3% to S$9.82 psf, making it second in terms of rent, to the Marina Bay micro-market in Q2 2022 (Please refer to Table 1).
Net demand for CBD Grade A offices amounted to 136,000 sq ft in Q2/2022, a 130.5% increase from the 59,000 sq ft in Q1/2022. This rise in demand for office space led to a quarterly increase of 0.4% QoQ in average monthly rents for a second consecutive quarter to S$9.47 psf.
Office rent for 2022 is projected to maintain at 3% year-on-year (YoY) as with Q1. On a YoY basis, office rents grew 1.1% in Q2/2022, higher than the 0.3% growth in Q1/2022. There is still robust demand for office assets despite headwinds from geopolitical uncertainties and higher interest rates.
The tightening of supply and demand balance and this period of high inflation is pushing landlords to raise their gross rents. This is to cover increasing costs of manpower and service providers while complying with environmental standards and growing their sinking fund for future spend on the environmental front.
Alan Cheong, Executive Director of Research at Savills Singapore adds, “Although there are economic challenges, with low levels of new supply, rents have been able to rise to offset inflation and future environmental related expenditures.”
Read the full Q2/2022 Office Briefing here.