CapitaLand Commercial Trust occupancy rates slipped to 96.4% in 3Q15

2016’s impending office space supply rush spells trouble.

CapitaLand Commercial Trust (CCT)’s 3Q15 overall portfolio occupancy rates suffered through a small dip from 98.0% to 96.4% in 3Q15, according to a report by OCBC. Market Grade A office rents and rental reversion also took a hit. Rents fell 3.5% QoQ to S$10.90 psf/mth, while positive rental reversion slowed to a trickle.

Despite a distributable net income rise of 2.6% YoY to S$63.2m and a net property income growth of 1.5% YoY to S$52.7m, OCBC asserts that trouble is lurking around the corner for CCT.

“The scope for meaningful reversion upside ahead is likely limited, in our view, due to a weak outlook for Grade A office rents which we forecast to dip 10% to 20% in 2016,” OCBC says.

CCT reports, however, that it has taken steps to minimize fallout by spreading out the lease expiry of its portfolio.