Occupancy rate of CBD Grade A offices edged down by 0.9%

Are tenants already packing up?

According to Colliers International press release, with some tenants taking flight to quality, the average occupancy rate for Grade A office space in the CBD micro-market dipped from 94.5 per cent in 4Q 2012 to 93.6 per cent (down 0.9%) in 1Q 2013, while that for Premium Grade office space increased from 88.5 per cent to 90.2 per cent across the same period.

Mr Marcus Loo, Executive Director of Office Services at Colliers International, says, “Rents of Premium Grade office space continue to face downward pressure and have provided an opportunity for tenants to upgrade to newer premises with better specifications.

We are increasingly seeing more companies rationalising their usage of space; thereby, seeking buildings that offer an efficient floor plate layout.”

Capital Values

The office sales market started the year on a positive note – supported by the continued low interest rate environment, as well as investors’ search for alternative investment options after the property cooling measures were implemented in the residential and industrial sectors.

There are also end-users buying for own occupation.

For instance, SBF Centre, a new 99-year leasehold mixed-use commercial development located along Robinson Road, reportedly sold 113 of the 138 office units during its soft launch in February at prices starting from S$3,200 per sq ft.

There was also keen interest in the en bloc sales market in 1Q 2013. NTUC Income acquired the remaining 51 per cent interest at S$2,371 per sq ft from Goldman Sachs to take full ownership of 16 Collyer Quay, while Guthrie acquired 2HR, a seven-storey commercial building at 2 Havelock Road, for S$1,626 per sq ft (based on net lettable area). 

Underpinned by firm demand, the average capital values of Premium and Grade A office space in the Raffles Place/New Downtown micro-market continued to hold firm at S$2,640 and S$2,390 per sq ft, respectively, in 1Q 2013.