CBD Grade A office rents seen to grow 2% to 3%

It is underpinned by a sustained flight to quality to limited new supply.

The ongoing flight to quality is backed by a widening rental gap between CBD Grade A and Grade B offices, said Cushman & Wakefield in a statement. 

Rising CBD Grade A rents could drive some cost-conscious occupiers to decentralise. 

Led by newly renovated buildings, decentralised office rents are predicted to grow by 2%-3% year-on-year in 2023, after 1.6% growth in the first half of 2023, year-to-date.

Despite economic conflicts, CBD Grade A office net demand remains resilient compared to 2020 levels, with net demand levels expected to come in at about 700,000-800,000 sf for 2023, as compared to just 90,000 sf in 2020. 

On the supply side, net supply will outperform net demand, driving CBD Grade A vacancy rates higher to 5.6% in 2023. 

The rise in office supply is mainly driven by IOI Central Boulevard Tower, which would contribute 1.24 million sf in 2023.