Office market spikes to $1.26b in Q2, led by block sales

Mapletree Anson's sale to PAG topped deals this period.

The office investment market surged 1,707.75% to $1.26b in Q2 from $69.7m in Q1, driven by six block transactions which totalled $1.12b, Savills reported.

Of the six transactions, three exceeded $100m each.

Six strata office transactions made up the remaining $137.7m of investment.

The sale of Mapletree Anson to PAG was the largest deal during the period, amounting to $775m or $2,352 per square foot (psf) for 330,000 sq ft.

Meanwhile, the office leasing market moderated for a few quarters due to tech layoffs, slow economic growth, high interest rates, and geopolitical uncertainties. Companies have also opted for leasing renewals amidst high costs and a lack of cheaper alternatives.

In the coming quarters, IOI Central Boulevard Towers, which spans 1.26 million sq ft, will receive its Temporary Occupation Permit (TOP). Amazon and Morgan Stanley, amongst its pre-committed tenants, have secured about 40% of the space.

The average monthly rents of CBD Grade A offices under Savills increased 0.2% quarter-on-quarter (QoQ) to $9.67 psf in Q2.

In addition, Savills reported that nearly all micro-markets saw quarterly rent increases, except Orchard Road and Shenton Way, where Grade A office rents remained flat.

Amongst other submarkets, rental growth ranged from 0.2% to 0.4%, with City Hall seeing the largest increase at 0.4%, reversing a 0.1% dip in the previous quarter, whilst Marina Bay Grade A office rents also rebounded by 0.3% QoQ after two-quarters of decline.