_Office Market Update Q3 2020

Key Highlights

• Prime Grade office rents in the Raffles Place / Marina Bay precinct fell by 2.3% quarter-on-quarter (q-o-q) to S$10.37 per square foot per month in Q3 2020, bringing the total decline in the first three quarters of the year to 8.4%. 

• Prime Grade occupancies also continued to drop, albeit more mildly at 0.6% q-o-q as existing leases generally remained committed.

• The amount of shadow space is estimated to have increased from at least 170,000 sq ft in the previous quarter to some 260,000 sq ft in Q3, as corporates continue to review the most efficient use of space through working from home rotations.

• More traditional businesses have contributed to co-working space demand, as corporates harness flexible spaces on shorter leases to augment their space requirements. Arcc Spaces at One Marina Boulevard reported a 30% take-up rate with companies in finance, technology and professional services, after starting operations in August.

• E-commerce and technology companies continue to lead office space demand. Amazon took up some 90,000 sq ft of office space vacated by Citibank in Asia Square Tower 1, while food-delivery service Delivery Hero will expand from its existing premises to take up about 50,000 sq ft in the upcoming Afro-Asia I-Mark.

• The redevelopment of several ageing office buildings in the CBD will provide a further boost to easing occupancy levels. Displaced occupiers as a result of the redevelopment of Shaw Towers, Keppel Towers and Tower Fifteen this year, as well as AXA Tower, Fuji Xerox Tower and potentially Central Mall in 2021, will generate leasing demand.

• Office rents are expected to drop closer to 10% within the projected range of 10-15% in 2020, followed by a more moderate 5-10% easing in 2021.

At Knight Frank, we trade in innovative solutions, delivering marketing and leasing strategies, and providing the best development consultancy and investment advice. From advising owners on procuring business spaces to helping tenants locate the ideal workplace, our breadth of properties range from conventional warehouses and factories to high-tech business spaces. Recognising the uniqueness of each company’s space needs, we are committed to furnishing sound advice backed by intelligence that’s on the pulse of the latest market trends and conditions.