Office rental growth to slow as firms downsize and competition rises

Colliers expect full-year rental growth of 2.0%

Office rental growth may ease this year as landlords face higher competition and demand from tenants becomes tepid.

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For 2024, Colliers expects rents to grow by up to 2.0%.

Colliers underscored that tenants are showing increasing resistance to higher rents whilst firms are rationalising their spaces.

"There have been no major new entrants looking for space in the market, with most tenants looking for lease extensions or renewals, while some are taking the opportunity to relocate with a smaller footprint," Colliers underscored.

The real estate expert noted that major financial institutions and tech companies, formerly main drivers of office demand, are still right-sizing.

On the flip side, a more diverse group of occupiers from legal, professional services, and energy firms are bolstering demand for office space.