Prime office rents holding up despite slowing economy: Knight Frank

Office rents in Raffles Place and Marina Bay remain resilient in 3Q2023 as occupancy levels remain firm. Knight Frank forecasts prime office rents to hold steady, growing between 3% to 5% for the whole year.

Occupancy levels remain firm in the Raffles Place and Marina Bay precinct along with the overall CBD. According to a quarterly report by Knight Frank, prime grade office rents in the area rose 0.8% q-o-q to an average of $11.05 psf per month in 3Q2023. With no new office inventory expected until 2024, occupancy levels will remain steady with very marginal rental upside.

Managing director at Knight Frank Singapore, Calvin Yeo noted, “The slowing economy did not deter office rents from holding up, with prime office rents growing a moderate 3.4% in the first nine months of 2023”. Despite larger international banks such as UBS and Standard Chartered announcing reductions in headcounts recently, a number of banks have been sourcing for “modest expansion space”.

International firms have also been attracted by Singapore’s office market, with companies such as San Francisco-based global human resource firm Deel and Japanese firm Exeo Global opening regional offices in the city-state.

Yeo commented, “Undergirded by a tight labour market, office tenants will continue to take holding positions by renewing or relocating their leases cautiously”.

A survey by the Manpower Group supporting the forecast indicated that 48% of respondents expect to increase headcount in the next few quarters.

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Knight Frank is maintaining its projection for office rents growing between 3% to 5% for the whole year – showing resilience in Singapore’s office market.