_Office Market Update Q4 2020

Key Highlights

• Prime Grade office rents in the Raffles Place / Marina Bay precinct contracted 10.2% in 2020 as rental declines moderated in Q4 2020, dipping by 2.0% quarter-on-quarter (q-o-q) to S$10.16 per square foot per month compared to the -2.3% q-o-q decrease in Q3 2020.
   
• Rental declines generally eased due to short-term renewals, as tenants adopted a wait-and-see approach until the economic outlook becomes more certain.
   
• Although pre-termination space continued to rise and was estimated at 330,000 sq ft in Q4 2020 compared to the 260,000 sq ft in Q3 2020, occupancy levels for prime grade offices remained supported by committed leases, resulting in a slight 0.2 percentage point decline q-o-q in Q4.
   
• In Q4 2020, corporates in the banking and insurance sectors started the trend of consolidating and paring down their real estate footprint as flexible work arrangements became more widely adopted.
   
• Information and technology communications firms continued to be active in the office market, with expansion plans by ByteDance and Tencent, and an anticipated move by Lazada.
   
• Barring any recurring waves of the virus, consequent lockdowns and with the economy improving, office rents may fall by around 5% in 2021 before bottoming out and recovering in 2022.

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.