Singapore Grade A office rents’ rate of decline at its slowest since 2019

Gross effective rents slipped by 0.4% to S$9.37 psf in Q2 2021. 

Following five consecutive quarters of falling rents in Savills basket of CBD Grade A office buildings, the rate of decline has slowed to a crawl, the slowest since 2019. This may be a signal that office rents may be bottoming out. 

According to Savills, compared with Q1/2021, the average gross effective rent in its basket slipped by 0.4% QoQ to S$9.37 psf. For good-quality buildings in prime locations, especially those rate AAA in our generic Grade A basket, rents have stabilised. Savills adds that while some firms gave up their space as part of a right-sizing strategy, some Chinese and tech firms have seized the opportunity to expand their footprint in better-quality and well-located offices. These new leases are likely to have transacted at a slightly higher rent as firms took up less space than the vacating tenants, hence easing the pressure on overall office rents. 

“As a result, key business districts such as Marina Bay, Raffles Place, Shenton Way and Tanjong Pagar micro-markets saw a more moderate pace of rental decline in Q2/2021. Rents in the Beach Road/Middle Road micromarket remained flat after five straight quarters of decline.”