Office market ends 2016 with more renewal deals

Net absorption in 4Q16 was at 542.259 sqft.

After a challenging start to 2016, the office market ended the past year with a bang across key indicators. According to CBRE Research, net absorption recorded 542.259 sqft. in the past quarter, although this was mostly due to pre-commitment in the newly completed DUO Tower and further leasing in Guoco Tower.

"That said, vacancy levels held up relatively well, with only a marginal increase from 5.9% in 3Q16 to 6% as at the year-end," CBRE noted.

The pace of downward rent adjustment slowed further and rents appeared close to finding support levels.

The bulk of transactions in 2016 were renewal deals. Lower rents have encouraged many tenants to take advantage of favourable market conditions by locking in early renewals or to restructure leases at competitive rates.

"Other tenants that have pursued relocation have also been able to secure attractive lease terms and this has supported some anchor tenant commitments in the new developments," CBRE said.