Tenants have the upper hand in this market.
Office landlords are in for greater pain this year, with prime rents feared to dip by as much as 10% on back of weak demand and excessive supply.
According to Colliers, the office occupier market will be characterised by caution in 2016, as tenants across the board remained concerned with steep occupancy costs.
Colliers noted that landlords will have a harder time securing leases this year. The market will see approximately 3.5 million sq ft of office space coming on line in 2H 2016, the majority of which still remains available.
“Occupiers still view the market with caution and landlords build on an attract-and-retain approach towards them by developing incentives and attractive rates. It has been observed that the new supply scheduled to come on to the market in H2 2016 have not secured as many pre-lettings as developers would hope, therefore the first half of 2016 will be key to the success of these developments,” Colliers said.
Rents for Premium Grade A buildings in the Raffles Place and New Downtown continue to soften. Rental levels are expected to continue on a downward trend throughout 2016, potentially moving off 8-10% across the market.
“Generally, it is expected that occupancy levels in the office sector are likely to remain relatively stable, until the scheduled new developments come onto the market from the second half of 2016. However, we would anticipate more pre-lease activities to take place only after Chinese New Year,” Colliers said.
Do you know more about this story? Contact us anonymously through this link.