Grade A offices lead market recovery in 2021

The office market registered positive net absorption of 0.13 million sq ft in the first quarter.

Preliminary estimates for office market indicators over Q1 2021 show signs of recovery, with positive net absorption and tightening vacancies, led by Grade A office buildings which mainly benefitted from leasing demand, according to a report from CBRE Research.

Grade A office rents remained stable QoQ at $10.40 per sq ft. per month, with vacancy rates at 3.3% for the three months to March 31. Whilst, Grade B rents registered further rental decline of 1.3% QoQ to $7.80 per sq ft. per month, with vacancy rates going up to 7.4% in the same period.

After three consecutive quarters of negative net absorption, the office market also registered a positive net absorption of 0.13 million sq ft in Q1 2021.

CBRE Research has noted an uptick in Singapore’s leasing momentum, with the Grade A market also recording a positive net absorption during the period “as occupiers capitalised on the declining rents and took flight to prime office buildings”.

“There is optimism surrounding the mid-term outlook, as prospects of the office market remain healthy. Over the course of 2021, office demand is expected to be supported by gains in employment and a gradual recovery of Singapore’s economy. In addition, office rents will be supported by a tight supply pipeline,” said Catherine He, associate director of research, Southeast Asia.

CBRE Singapore co-head of office services David McKellar also noted that the government’s latest announcement on around 75% of employees being able to return to the workplace starting 5 April is a “silver lining” for the market.

“This bodes well for the office market as more firms are gradually planning for the return of employees to the workplace and this reinforces the importance of the physical office,” he said.