Premium, Grade A office space rents up by 0.9% QoQ in Q4 22

Rents reached $11.40 per square feet in the fourth quarter last year.

Rents of premium and Grade A office space increased by 0.9% quarter-on-quarter in the fourth quarter (Q4) of 2022 as availability remained tight due to changing market conditions, Colliers said.

The rents reached $11.40 per square feet whilst leasing activity in this office segment rebounded in Q4, with total net absorption surpassing 500,000 sq ft for the fiscal year 2023. 

The vacancy rate for this type of office space tightened to 2.3% due to a limited supply. 

Capital values for premium and grade A office space in the core CBD grew by 1.7% in Q4, reaching $3,050 per sq ft.

It is expected that rental growth for this segment will ease by 2-3% year-on-year in 2023.

The macroeconomic situation and drought in funding also decreased demand from tech firms, which are recently reporting layoffs. Tech firms have either changed their focus from growth to profitability which led to suspending their expansion plans.