Market Forecast
September 2017

Top prime rates now average between $9.50 and $11.00 per sq ft and have definitely firmed over the last six months

 

The turnaround in prime office rentals happened far swifter than many expected, considering the amount of new supply coming online. This in part has been due to the staggered release of established office space/phased re-locations, the prospect of limited supply of new developments in the medium-term future, some companies paying historically high rates and the holding power of the larger landlords. Top prime rates now average between $9.50 and $11.00 per sq ft and have definitely firmed over the last six months.


The secondary market has still yet to feel the full brunt of large voids that will soon start appearing, but many landlords are pre-empting the competition, pressing hard to secure tenants now before rates fall further. Rates in this category range from $6.25 to $7.50 per sq ft. Orchard Road has always been stable and averages around $7.00 to $9.00 per sq ft.


The edge of CBD and out-of-town locations are needing to work very hard to find tenants, but it is these locations that can offer the best combination of quality and value for money. There are some real bargains to be found in decentralised locations at rates between $5.00 and $6.50 per sq ft for very good quality space.


Over the next 12 months we predict that prime office rates will see a modest increase, as they are already at a reasonably full level. The secondary market will become even more competitive to fill out its buildings and could soften by a further 8% - 10%.


The edge of CBD/out-of-town locations already offer some remarkable opportunities and rates here haven’t got much further to go down.

 

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