Contraction in S’pore prime office market could ease: JL LaSalle

Source : Channel NewsAsia – 29 Jun 2009

Singapore’s Prime Grade A office market has seen three straight quarters of rental contractions but Jones Lang LaSalle says that pullback is easing.

The property consultancy said rentals fell 11 per cent in the second quarter, compared to 28 per cent in the first quarter.

Jones Lang said landlords have been taking a defensive strategy of securing occupants for their office space at the expense of rentals.

This came on the back of the challenging business environment and large supply of office space due to come on stream over the next few years.

The central business district expects to add another 1.2 million square feet of new space by the end of 2009.

As such, Jones Lang said it does not expect the office market to recover in the short term. However, it points out that any further rent correction to come must be seen in perspective to the run-up experienced in 2007.

That year, rentals surged to about S$18.40 per square foot per month, surpassing the historical high by up to 80 per cent.

Since then, office rentals have declined by 48 per cent to about S$9.50 per square foot per month. This is still more than double the historical low of S$4.55 per square foot per month seen in 2004.