Singapore’s office takeup forecast to double in 2022

Thanks to robust positive net absorption in the third quarter.

According to CBRE Research, the office take-up rate for the Singapore Office Market in 2022 is expected to double year-on-year, on the back of Q3 2022’s strong positive net absorption which has led rents to surpass pre-pandemic levels. 

“While it is unlikely full year take-up will return to pre-pandemic levels of approximately 1 mil. sq ft yet, it is a positive sign and testament that physical office still plays an integral role in the workplace ecosystem. Rental growth in 2023 is likely to remain positive, amid rising headwinds that could temper, but unlikely derail,” the report added.

Here’s more from CBRE:

Strong office take-up in Q3 2022 

Q3 2022 saw strong positive office net absorption, which brings year-to-date take-up to 0.56 mil sq. ft., surpassing the total take-up of 0.32 mil sq. ft. for the whole of 2021. Key demand drivers came from expansions by tech firms such as ByteDance, flexible workspace operators and non-banking financial companies, which took up significant secondary office space in the Core CBD (Grade A). Fresh precommitments to upcoming new projects such as Guoco Midtown and Central Boulevard Towers were also inked during the quarter. 

Broad-based demand in all micromarkets 

Besides the growth sectors, tenant displacement from planned redevelopments such as Clifford Centre and Robinson Point has also contributed to a broad-based recovery. Islandwide vacancy declined further to 4.9% in Q3 2022 from the previous high of 6.8% in Q3 2021. Despite hybrid working arrangements likely to stay, total leasing volume from renewals, new setups and expansion over the past three quarters has been resilient. According to the Google Mobility Index, Singapore’s footfall to workplaces has recovered steadily since all workers may return to the workplace from April 26. 

David McKellar, Co-head of Office Services, Singapore, says, “The Singapore office sector has proven its resilience with strong occupier demand for well-located, high-quality buildings. With the return to office in full swing and more companies organizing physical activities at the workplace to encourage employees to come back, the CBD is regaining much of its former vitality and buzz. This is a testament that the physical office still plays an integral role in the workplace ecosystem, especially when it has evolved into a consideration in attracting and retaining talent.”