Premium office rents to jump 15% in 2015 as supply squeeze escalates

Grade A rents could grow by 10%.

The office sector will continue to be the star performer in the local property scene. A perceived supply squeeze will cause rents for Premium Grade office space in the Raffles Place/New Downtown micro-market to continue to increase by about 10-15% in 2015, Colliers International revealed.

Meanwhile, rents for the overall Grade A and B office space in the CBD could grow by up to 10%.

As of December 2014, the monthly gross rents of Premium Grade office space in the Raffles Place/New Downtown micro-market averaged at $11.93 per sq ft, rounding up 2014 with an on-target full-year growth of 15.8%. This is almost double the 8% growth in 2013, and closing in on its previous peak of $12.25 per sq ft in 3Q 2011.

Similarly, the average monthly gross rents for Grade A and B office space in the CBD have gained 6.8 per cent and 4.9 per cent year-on-year to reach $9.23 per sq ft and S$8.09 per sq ft, respectively, by the end of 2014.
In fact, they have surpassed their corresponding previous peaks of$9.14 per sq ft in 3Q 2011 and $8 per sq ft in 4Q 2011.