Credit: Samuel Isaac Chua/The Edge Singapore
SINGAPORE (EDGEPROP) - Prime-grade office rents in the Raffles Place/ Marina Bay precinct recorded a second consecutive quarter of marginal growth in 4Q2021, according to a research report by Knight Frank.
Prime office rents inched up 1.5% q-o-q to $10.13 psf per month, following a 0.2% increase last quarter. The full-year decrease in prime office rents in 2021 was a marginal 0.3%, compared to the decline of 10.2% in 2020. 4Q2021 occupancy levels in the Raffles Place/ Marina Bay precinct declined by 1.8 percentage points, mainly attributed to the completion of CapitaSpring.
Nevertheless, Knight Frank notes that despite the general shrinkage in office space usage due to flexible workplace mandates, overall CBD occupancy remained solid at above 90%.
“The reconfiguration of offices such that less space can be used more collaboratively by more staff continues to drive the ‘flight to quality’, as corporates increasingly take up better but less space before rents start to increase substantially,” the report reads.
Knight Frank highlights that more business leaders are increasingly compelled to curate an enjoyable and flexible work environment that attracts and retains talent. To that end, as the office market transforms with hybrid-working brought from the margins to the mainstream, Knight Frank anticipates the quantum of space required by businesses will be significantly recalibrated.
In its report, employers are cautioned to be sensitive in finding the best balance when it comes to hybrid work arrangements, even after the government no longer mandates work-from-home. Citing an employee survey by EY in 2021, Knight Frank notes that 54% of employees stated that they would consider leaving their jobs after the pandemic subsides, if some form of workspace flexibility is not provided.
In addition, Knight Frank points out that occupiers with shorter-term enterprise ventures are incorporating co-working space as part of a distributed and hybrid workplace strategy, benefitting from more flexible leasing commitments. For example, data management firm DataStax, which has recently set up a regional headquarters in Singapore, took up space in WeWork at Suntec Tower 5.
Looking ahead, Knight Frank maintains a forecast of 3% to 5% in rental increase for the whole of 2022, underpinned by limited upcoming office supply and a more resilient economy.