Singapore maintains third place in Asia-Pacific office occupancy costs

Analysts expect a modest recovery in the local office market over the next three quarters.

Singapore remains as the third most expensive office location, while Tokyo and Hong Kong retained their top two positions, respectively, according to Asia Pacific Office Market Overview Quarterly Update April 2010 by Colliers International.

On the back of strengthening economic conditions and improving occupational demand, prime office rents in the Central Business District edged up 0.5% quarter-on-quarter (q-o-q) to S$6.38 per sq ft per month as of the end of 1Q2010.

There was an increase in leasing activity on all fronts – relocations, renewals, expansions and pre-commitments – with occupiers showing a preference for newer or newly retro-fitted office buildings. For example, Toyota Motors Asia Pacific will be relocating from the 13-year old Centennial Towers in the Marina Centre/City Hall micro-market to the newly completed Twenty Anson in the Shenton Way/Tanjong Pagar micro-market.

Meanwhile, Nomura Singapore Limited pre-committed to 102,000 sq ft of office space in Tower Two of the first phase of the Marina Bay Financial Centre. Verizon Communications pre-committed to 32,000 sq ft in the Ocean Financial Centre, which is slated for completion in 1Q2011.

Given the ongoing flight to quality and the gradual expansion in the private sector, the local office market is expected to see a modest recovery over the next three quarters of 2010, with the prospective rental upside capped at 5% during the period.