Prime office space race intensifies after rents soared 14.7% in Q3

Grade A rents reached $10.95 psf/month last quarter.

Office rents continued their upward trajectory in the third quarter, with Grade A rents registering a staggering 14.7% year-on-year increase during the period.

According to CBRE, the Grade A market also witnessed a sizeable fall in vacancy from 5.2% to 4.3%, reflecting vacancy rates last observed pre-GFC.

Meanwhile, the average Grade B rent at the CBD core grew 2.4% q-o-q to $8.50 psf/month, while the average Grade B Islandwide rent increased by 2.6% to $7.90 psf/month.

“Better quality developments saw the strongest take-up and this, in turn, supported higher rental escalations in these buildings,” noted CBRE.

Here’s more from the report:

Key office developments in the pipeline for the rest of 2014 include CapitaGreen (700,000 sf) and Westgate Tower (304,960 sf). The expected completion of South Beach Tower (527,450 sf) has been delayed slightly and is now due in Q1 2015.

Pre-leasing activity for these CBD developments has gathered momentum over the course of the past quarter as developers have been able to capitalise on tightening availability and lower vacancy with few competing for space.

The quality of the tenants is also a stand-out. In the decentralised market, Westgate Tower hassecured its first major occupier – CPG Corporation.