Office landlords dangle juicy incentives to keep tenants as rents drop

Rent holidays and rebates, anyone?

Tenants now have the upper hand as rents drop across the Central Business District, and office landlords are scrambling to come up with tempting offers in order to keep their properties fully occupied.

A report by DTZ noted that average office rents in the CBD declined 4.1% quarter-on-quarter to $10.40 per sq ft per month in Q3. Average monthly gross rents in Marina Bay booked the biggest drop, slipping by 5.5% q-o-q to $13.00 per sq ft. Meanwhile, rents in Raffles Place decreased by 3.4% to about $10.45 per sq ft.

Rents in the CBD fringe also dropped, albeit at a more marginal pace. CBD fringe rents declined by 2.1% from $8.45 per sq ft per month in Q2 to about $8.25 per sq ft per month in Q3. 

“Slower economic growth in Q3 was partially responsible for the fall in CBD office rents. Leasing activities were slower in Q3 and were mainly lease renewals. Landlords also introduced more incentives to retain or attract tenants. These incentives include longer fitting out periods, rent holidays and rental rebates, which will yield lower net effective rents for the occupiers,” said DTZ.