Grade A office rents to grow around 3%-5% for 2022
Return-to-office momentum to drive higher demand for offices.
Grade A office rent is expected to grow around 3% to 5% for the entire year on the back of the return-to-office momentum, Cushman & Wakefield said in a report.
Specifically, full-year rental growth will be 5.4% for the CBD market, and 3.2% for decentralised office rents.
In Q2, rents for the two markets climbed 1.6% QoQ and 0.4% QoQ, respectively.
For the rest of the year, demand for CBD offices will be driven by "flight to quality and new demand from wealth management firms," whilst "cost-conscious tenants" will carry rents for decentralised offices.
Unlike before, CBD will also likely see lesser demand from technology firms due to "tightening financing conditions," according to C&W.
"The impending rise in interest rates has roiled equity markets and saw a steep devaluation of tech companies. Some major tech firms have also announced layoffs. As such, office demand from tech could cool over the short-term," the property expert said.
"Nonetheless, well-capitalised and growing tech firms could still drive pockets of demand, given strong long-term tech growth prospects," C&W added.