CBD Premium, Grade A office rents up by 1.5% QoQ in Q1 2022: Colliers
Rents went up to $10.26 per square foot.
Central Business District (CBD) Premium and Grade A office rents increased by 1.5% quarter-on-quarter in the first three months of 2022 to $10.26 per square foot, real estate firm Colliers said in its report.
The Colliers Office 1Q 2022 Report attributed the increase to healthy leasing demand.
Specifically, leasing demand for CBD Premium and Grade A segment continued to see positive net absorption, with 134,000 square feet in the first quarter of 2022 whilst the vacancy rate for the segment tightened further to 3.3%.
This was also due to corporates' choice for newer office buildings as they prepare for return to office mandates and pick-up in business activity as Singapore shifts to an endemic state.
With hybrid working schemes no longer required, occupiers are likely to be more selective and focused on providing the right type of office environment, June Chua, executive head of Colliers' tenant representation, said.
He added that high-quality office spaces with updated specifications will likely outperform.
"Hence, landlords of more mature office buildings should consider repurposing or redeveloping their assets into innovative and sustainable developments," he said.
Colliers also projected that, for the remainder of 2022, CBD Premium and Grade A segments will outperform amidst flight-to-quality trends due to a heightened emphasis on sustainability and wellness.
Without the risks of new COVID-19 variants, Colliers said rents in the prime segment are also expected to increase about 4% to 5% by the end of 2022.