Singapore’s Grade A office rents to reach six-year high by the end of 2014

Q3 marks the 6th consecutive quarter of increases.

Local firms are shelling out more money to hold on to their prime locations. The country’s Grade A office rents are estimated to reach their highest level since 2008 by the end of the year even as rents in prime spaces soared to a three-year high in Q3.

According to Cushman and Wakefield, average Grade A office rents rose to the highest since late 2011 at $10.20 per square foot per month, representing a 2% quarter-on-quarter increase and a 9.9% year-on-year increase.

A notable take up in Marina Bay Financial Centre resulted in the vacancy rate for Marina Bay falling to 6.1% in Q3 compared to 6.6% in the previous quarter. Office vacancies in the suburbs also declined from 2.5% to 1.8%.

“This quarter has seen Grade A office rents continue their upward trend and reach their highest level since the end of 2011. Strong market activity heading into the final quarter of 2014 leads us to forecast that net absorption is on track to reach 800,000-900,000 sf and that Grade A rents will reach their highest level since 2008 by year-ends,” said Toby Dodd, Managing Director, Cushman & Wakefield, Singapore.

Here's more from the report:

The average effective monthly rent for Marina Bay rose to S$13.00 psf/mo, a 0.4% increase from a quarter ago. As at the third quarter, rents at Raffles Place remained stable at S$10.25 psf/mo.

The average rent in Shenton Way saw a minimal rise of 0.6% from the previous quarter to S$8.40 psf/mo. Orchard Road rents recorded a slightly larger increase to S$9.80 psf/mo, a 1.0% increase quarter- on-quarter.

However rents in City Hall/Marina Centre rose to S$9.50 psf/mo, an increase of 5.5% compared to a quarter ago.