As the supply of office spaces, especially in the Central Business District, increases, landlords are lowering office rents to entice new tenants. For the 3rd quarter in a row, CBD office rental prices have fallen.
Property analysts are expecting a rise in supply as companies move out of the prime central business district into cheaper regional business hubs and expansion plans for many foreign entities may have been put on hold due to the wavering global economy. Grade A offices were resilient despite the overall fall, perhaps due to the lack of supply of new units in the core areas. But moving outwards from the centre of the CBD, Grade B office spaces in Shenton Way, Robinson Road, Cecil Street, Anson road and Tanjong Pagar fell 4 per cent.
Co-working spaces have gained popularity of late, and demand for these sort of short-term leasing or shared-leasing arrangements may be on the rise. Most of these tenants are start-up firms in the technology and social media fields who need spaces close to their clients and conveniently located to attract and retain talents.
In addition to the off-kilter scale of supply and demand, some tenants may also be looking at subletting existing spaces which they have leased but are not occupying, thus increasing the actual amount of office space available in the market.