Grade A offices in Raffles Place badly hurt by tenant exodus to Marina Bay

Haggle for the rent while you can.

According to Knight Frank, overall office rents island-wide continued its stagnant trajectory for 3Q 2012, the third consecutive quarter of relatively flat rental growth. The bulk of office clusters within the central area such as Grade A and A+ offices in Raffles Place, the Suntec / Marina Centre and Orchard Road saw marginal declines in rents of 0.9 per cent, 0.6 per cent and 0.6 per cent quarter on quarter (q-o-q) respectively.

Conversely, rents of suburban offices, the Shenton Way and Tanjong Pagar clusters remained flat from 2Q 2012.

Grade A office buildings in Raffles Place are still recovering from their loss of major tenants who moved to the newer buildings at Marina Bay. Depending on landlords, some incoming tenants have higher room for negotiation in terms of rent free concessions such as fitting out periods.

The Suntec / Marina Centre cluster experienced a 0.6 per cent decrease in rents mainly resulting from the space vacated by Citibank at Centennial Towers. Nonetheless, the 129,000 sq ft of vacated space is gradually filled by the expansion of existing tenants and new tenants in the legal, engineering and energy sectors.

Smaller-sized office units of 1,000 to 5,000 sq ft are currently in demand with suitable buildings located in the Tanjong Pagar / Shenton Way / Robinson Road cluster.

These are appealing to businesses in the IT, recruitment and insurance industries that require a centralised location in close proximity to their clients and seek cost effectiveness in their real estate needs. In terms of rent, the Tanjong Pagar / Shenton Way cluster is a $2 per sq ft difference from Raffles Place.