Vacancies, rents fall for prime office spaces

Singapore's prime office spaces saw a decline in vacancies and rents for the second consecutive quarter this year, real estate firm Cushman & Wakefield said on Tuesday.

Grade A vacancies declined to 6.8 per cent from 7.9 per cent in the first half of 2012 due to sustained leasing activity and a lack of new deliveries, the firm added in a report.

Grade A office space refers to those in prime locations within the financial district with high-quality facilities, design and architecture. These office spaces are typically occupied by international firms.

Vacancies of prime office space in the Marina Bay area declined 3 percentage points to 9.8 per cent in the first half of the year, as tenants took advantage of attractive lease packages to upgrade their space.

Office spaces in Orchard Road were the only exception from the declining trend, with vacancy rates rising from 1.5 per cent to 2 per cent.

Rents continued to slide for the fourth consecutive quarter, with the largest decline registering in areas like Marina Bay and Raffles Place, where rents slipped by 2.5 per cent and 3.9 per cent respectively.

Rental rates in City Hall and Marina Centre also fell 1.8 per cent in the third quarter after remaining flat previously.

The Marketbeat report compiled by Cushman & Wakefield further predicted that the year would likely end with a continued decline in vacancies and stabilised effective rents in the CBD.

Recent liberalisation of the legal sector could also bring new demand for quality office space from international law firms, it said.

Office spaces set to be developed in the suburban areas such as Westgate in Jurong and Payar Lebar Square are also expected to lure firms out of the city centre.

This trend will likely be given a push by recent restrictions imposed on the use of lower-priced industrial facilities as office spaces.

ljessica@sph.com.sg