Office Rents Plateau 3Q2024 Cbd Vacancy Rate Climbs Second Consecutive Quarter Jll

SINGAPORE (Sept 22): The rental growth for CBD Grade A offices in 3Q2024 has reached a plateau at $11.50 psf pm, similar to the previous quarter. This follows a slowdown in growth from 1.4% to 0.7% q-o-q in 1Q2024 and 2Q2024 respectively, according to JLL data published on Sept 23. The 8.3% q-o-q vacancy rate in 3Q2024 is attributed to the completion of IOI Central Boulevard Towers (IOICBT). In turn, this has led to a resistance to rent hikes by occupiers, resulting in a downturn in the rental market. However, excluding the IOICBT, the vacancy rate for CBD Grade A offices would have remained relatively tight, similar to the post-pandemic low of 5.3% in 1Q2024. Occupiers are facing increased operating costs and remaining cautious with capital expenditures, leading to a decrease in net take-up of office space. This has presented opportunities for occupiers to upgrade to superior units in high-quality buildings. The completion of Shaw Tower has been pushed back to 2026, exacerbating the scarcity of available office space. As such, the limited supply could shift market dynamics in favour of landlords. Looking ahead, JLL expects office rent growth to remain modest in 2024, followed by a more robust recovery in 2025 due to an improved global economic outlook and companies adapting to new work models and growth strategies. The recent government decision to not award the Jurong Lake District Master Developer site has led to a more constrained outlook for new office supply in Singapore, potentially creating tight supply conditions in the medium term.

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