DEMAND FOR FLEXIBLE SPACE, GREEN DEVELOPMENTS
Demand for flexible space has rebounded. It was reported that enquiries for JustCo’s workplace solutions rose by more than 40 per cent in the first quarter of 2022 compared to the previous quarter, with a spike right after the easing of some restrictions in March.
JustCo has plans to open a new centre at International Plaza in early 2023. Another flexible-space provider WeWork also opened its biggest centre in the region in phases from July this year.
Underpinned by the emphasis on employees’ health and wellbeing as well as sustainable workplaces, occupier demand has gravitated towards the newer and greener developments.
CapitaSpring achieved a 93 per cent leasing commitment rate by the time it received Temporary Occupation Permit at end-2021 during the pandemic, while pre-commitment rates of Guoco Midtown and IOI Central Boulevard Towers scheduled for completion in 2022 and 2023, respectively, are climbing steadily.
OFFICE RENTS NEARLY BACK TO PRE-PANDEMIC PEAK
The pandemic has accelerated economic obsolescence of offices and provided the impetus to redevelop ageing assets. The latest to join the likes of AXA Tower, Fuji Xerox Towers, Keppel Towers and Shaw Tower in undergoing redevelopment is Clifford Centre in Raffles Place.
As a result, even with new completions, the growth in CBD office inventory has fallen behind that for demand. This has provided the stage for rents to climb.
For Grade A office spaces in the CBD, the average monthly gross effective rents have been rising at an accelerated pace every quarter since bottoming out in early 2021. By the second quarter of 2022, they had recovered to reach S$10.74 per sq ft, just slightly below their pre-pandemic peak of S$10.81 per sq ft in the fourth quarter of 2019.