Rents may be hit should stock market blues continue as it will result to reduced demand from finance sector occupiers.
This chart from Colliers International shows that average CBD Grade A office rents grew 4.3% QoQ to $9.20 psf. This is an improvement from the slightly slower growth rate recorded at 2.6% QoQ back in Q2. Meanwhile, CBD Grade B offices also rose to 7.75 psf.
The firm said however that the strong headline rent growth and falling incentives underpinned the effective uplift. They also noted that CBD Grade A rents in 2018 saw a cumulative growth of 12.1% so far.
“In view of tight vacancy and muted supply, we expect the steady upward rental trend to persist over the next two years, with average rent rising an estimated 8% YoY in 2019, and a further 5% YoY over 2020,” Collier International explained.
However, the firm also noted that their prediction may be too high should the tension in the stock markets continue which could push reduced demand from finance sector occupiers which lease about 45% of Grade A CBD spaces.
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