Discover the culprits in Singapore’s stunning office space vacancy decline

80% of new absorption came from just two areas.

Marina Bay and Raffles Place fuelled the sharp drop in Singapore’s office space vacancies in H1. A survey by Cushman and Wakefield revealed that 80% of new absorption of Grade A office space coming from Marina Bay and Raffles Place.

The survey showed that vacancy rates in Singapore office space declined to 3.5% in H1, as rents spiked to 10.7% year on year.

According to Cushman and Wakefield, “For the quarter, absorption for grade A office space within the Central Business District (CBD) has amounted to slightly more than 180,000 square feet (sf), of which close to 80% is attributed to buildings located in Marina Bay and Raffles Place due to their larger availability of space for lease and flight to quality.”

Here’s more

The vacancy rate for grade A offices in the five submarkets recorded another quarter of decline to 3.5%, reflecting a 0.5 percentage point fall from the first quarter of 2014.

As at the second quarter of 2014, the vacancy rate for Raffles Place saw a slight reduction from 3.1% to 2.7%. Shenton Way also declined marginally from 3.0% to 2.9% as at end June.

However, Marina Bay recorded a larger fall in vacancy rate to 6.6% or a 0.8 percentage point drop from a quarter ago. Orchard also saw a sharp fall in vacancy rate from 2.8% to 0.8% in the second quarter.

However, the vacancy rate for City Hall was higher at 1.5% in the second quarter of 2014, compared to 1.2% a quarter ago.

Leasing activity remains resilient marked by some notable leases especially in CapitaGreen, due for completion by end 2014 and now at 21% pre-commitment, with Cargill taking up 52,000 sf of space, Swiss private banker Bordier and Cie taking 11-12,000 and Jardine Llyod Thompson has taken up a lease of about 40,000 sq ft of space in the same building.

Also of note is Insurance Brokerage and Consulting firm Aon taking 70,000 sq ft. in SGX centre. These healthy leasing activities have also prevailed outside the CBD with the CPF Board taking up a long-term lease of more than 200,000 sq ft in Novena Square.

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