The lull will soon be over for office rentals

Monthly gross rents for CBD Grade A office space declined by a meager 1.1%.

According to Colliers International, rents continued to decline in 2Q 2012 on the back of an increasingly challenging global economic environment.

However, cushioned by a better than expected economic performance in Singapore as well as the temporary relief from a hiatus of major new office completions for the rest of 2012, the rate of rental decline moderated.

Colliers estimates that the average monthly gross rents for CBD Grade A office space fell by 1.1% QoQ in 2Q 2012 to S$8.45 per sq ft as of end-June 2012, compared to a drop of 4.3% in 1Q 2012.

“The decrease in Grade A office rents boded well for the market, as it improved Singapore’s competitive edge as a regional hub for business and companies had been able to secure office premises for cheaper rents. This pushed the overall CBD Grade A office occupancy rates up to 92.0% in 2Q 2012, from 90.9% in 1Q 2012,” it said.

”Weighed down by the uncertainty in the Eurozone as well as a possible supply overhang, office rental decline in the CBD is expected to continue in 2H 2012. However, the pace of decrease will slow down as Singapore strengthens its position as a compelling regional business hub,” it added.