Chart of the Day: Grade A core CBD office rents up 3.5% in Q3

It could still record an increase of 13-15% by end-2018 before seeing a moderated growth of 5-8% by 2019.

This chart from the OCBC Investment Research (OIR) with data from CBRE Research shows that the leasing momentum for the office sector was upbeat as core CBD office rents picked up 3.5% QoQ to $10.45 psf/month in Q3 which sealed its fifth consecutive quarter of growth.

Meanwhile, Grade B core CBD submarket rents increased 2.6% QoQ to $8 psf/month.

For 9M18, Grade A and Grade B Core CBD office rentals grew 11.2% and 7.4% respectively compared to their end-2017 levels. Occupancy rates for both markets also inched up 0.5 ppt to 94.6% and 94.7%, respectively.

OIR noted that demand for office spaces for the said submarkets was mainly from co-working operators, Telecommunications, Media and Technology (TMT), business consultancy and financial services sectors.

“We expect core Grade A office rentals to end 2018 with an increase of 13%-15%,” OIR commented. “Thereafter, in light of a higher base and expected slowdown in global economic conditions, we forecast rental growth to moderate to 5%-8% in 2019.”