Grade A office rents rise for 8th straight quarter

Grade A office rents in the Central Business District (CBD) have risen for the 8th straight quarter to hit a 10-year high.

Some areas in CBD see higher rents for office spaces

Overall, rents for prime office spaces in the CBD rose to $9.93 psf per month, up 12.6% in comparison to June last year.

Bugis Plus, Shopping Mall. Picture: iProperty

The increase, however, was more intense in specific areas, namely Beach Road/Bugis and City Hall.

In the Beach Road/Bugis area, office rents rose 18% as there were fewer available vacancies in office buildings here and rents were at $9.18 psf per month.

In the City Hall district, office rental prices rose 13.6% but rents were higher at $10.14 psf per month.

CBD office tenants may become more resistant to price hikes

Grade A office rents have already climbed 5.4% within the first half of 2019 and are expected to grow by another 5% in 2020.

Rental prices may, however, moderate from the 15% growth last year.

Fraser Tower

In Q2, transactions of these commercial properties grew 176% to hit $2.63 billion. The growth came mainly from 2 key deals – Sale of Chevron House for $1.03 billion and 50% stake of Frasers Property’s divestment in Frasers Tower for $982.5 million.

Analysts project that rents for Grade A office spaces in the CBD will continue to rise till next year. 2021 may be the year new supply enter the market, hence a dip in rents may be expected then.

Some are expecting tenants to become more resistant to price hikes as the current pace of increase is likely to have peaked.