More shadow spaces to haunt Singapore's grade A office market

Rental values are also declining as the finance and services sector shows softened demand.

According to Jones Lang LaSalle, new demand has softened, particularly amongst large financial services sector occupiers and we are seeing the emergence of shadow space availability in the CBD. Most firms are maintaining their headcounts, with just a few cases of significant retrenchment in the financial services sector. We continue to see some growth in headcount and spatial demand in the commodities, pharmaceutical and IT sectors.

Jones Lang LaSalle’s markets experts have shared their expectations for the office leasing markets in Asia Pacific in the first quarter of 2012. A dominant theme is the strong occupier demand in emerging South East Asian economies, which is driving rental growth. The bigger, more established markets which are dominated by financial services, Hong Kong and Singapore, are experiencing a decline in grade A rental values as the banking and finance sector remains focused on managing costs.

Jeremy Sheldon, Managing Director, Markets Asia Pacific Jones Lang LaSalle commented: “We are witnessing a polarisation in the region. Whilst we are seeing a slowing of leasing activity levels in the established markets, there is increasing activity in South East Asia, where we are experiencing higher enquiry levels than we have seen before. Companies are taking advantage of the major labour cost arbitrage within these markets and we expect this to continue this year. Overall our forecast for grade A rents is for limited growth this year in certain markets. The market generally looks to be much slower than 2011, although last year was a record in terms of take up, surpassing even 2007 which was the last peak of the market.”