Need some space? Landlords hike rents over office space dearth

Occupancies hit 5-year high in 1Q14.

Landlords have been raking in profit over the spike in office rental growth in 1Q14. No relief is in sight for careworn tenants, as office demand is expected to reach 2.2m square feet this year.

Office occupancies hit a new 5-year high in 1Q14 at 95.7%, sparking a 5% rise in rentals. This quarter on quarter increase is the fastest rate of growth for office rentals in over three years.

According to UOB Kay Hian, “With occupancies above 90-95%, pricing power will shift to office landlords, lending support to higher office rentals. Grade-A office rentals to rise 27% over 2014-15 to $12.40psf pm on the back of tight occupancies and moderating supply.”

Here’s more from UOB:

Centennial and Millenia Towers were achieving rentals of S$8-9psf pm a year ago, but signing rentals today are closer to S$10-12psf pm.

Asking rents in Asia Square Tower 2 have reached S$15-20psf pm while recent leasing deals have been in the low- to mid-teens, with smaller space commitments above the midteens, achieving levels unseen since the last peak in 2008.