Singapore’s office supply seen to spike 3% in 2014

Should landlords start to panic?

According to Macquarie Research, Island-wide office supply is expected to grow 3% in 2014, with key developments – CapitaGreen and Westgate Tower still at 0% pre-commitment rate, while South Beach Tower is at 10%. Asia Square Tower 2, which was completed in 3Q13, remains 30% occupied. On the bright side, 2015’s supply growth is minimal at just 0.4% and largely comes from strata-titled projects. This suggests that landlords have another 2 years to lease out 2.4m sqf of space before 2H16’s sizeable supply growth of 6.1% or 4.3m sqf. From 2014-15, Grade A supply equates to 1.2m sqf (Asia Square Tower 2’s vacant space of 0.5m sqf and CapitaGreen’s 0.7m sqf), which seems adequate vs. the average Grade A net absorption of 0.8m sqf per annum.

Overall CBD supply looks manageable over the next few years, with respective growth of 1.9% and 2.9% in 2013 and 2014. While no developments are due to complete in 2015, 2016 will witness an 8.7% increase in inventory.