Office market predicted to bottom out towards end 2017

Occupiers urged to take advantage of a softer market.

According to Colliers Quarterly, CBD Premium and Grade A rents have continued to decline, though at a slower rate. It is expected that the market may bottom out towards end-2017.

Although the recovery is slow, it is anticipated that new demand will return to more positive levels in H2 2017. This means that the Singapore office market may become a more promising market for landlords in the medium term. For now, however, the time still seem opportune for occupiers to take advantage of a softer market to review their space requirements.

“Demand continues to lag behind supply comprising more relocations than expansions. Premium and Grade A supply in CBD is expected to grow another 10% in 2017 on major completions,” Colliers said in the report.

The CBD vacancy rates as measured by Colliers are: Q42016: 7.0%; Q4 2017: 5.9%; end-2017F: 11.1%. CBD and Grade A office rents are expected to fall in Q4 2017: -0.2% QOQ; end-2017F: -2 to -5%. Prime office capital values are expected to remain stable on investment demand.