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Office rent decline eases as confidence returns

Posted on 18 Sep 2009 | Comments Off

Recovery seen next year, but market remains fragile in short-term

OFFICE rents fell for the fourth consecutive quarter, but the pace of decline has eased on the back of returning business confidence, a new report from CB Richard Ellis (CBRE) showed.

Data from the firm said that prime office rents averaged $7.50 per square foot per month (psf pm) in the third quarter. This reflected a 12.8 per cent quarter-on-quarter decrease, compared with the 18.1 per cent decline in Q2 2009 and 18.6 per cent contraction in Q1 2009.

In all, prime rents have fallen 53.4 per cent since their peak in Q3 last year.

Similarly, rents of Grade A office space – which is the top range of prime office space – slipped to $8.80 psf in Q3 2009. This represents a 13.3 per cent quarter-on-quarter decline, which is an improvement over the 18 per cent contraction in Q1 and 17.5 per cent decline in Q2.

However, vacancy rates continued to climb. Grade A vacancy rose to 4.2 per cent in Q2 2009, up from 3.6 per cent in the past quarter. It was 1.2 per cent just a year ago in Q3 2008. The take-up for Grade A space for the first three quarters in 2009 amounted to negative 223,397 sq ft. Likewise, the islandwide take-up was negative 570,000 sq ft for the first half of the year. Continue reading →

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Posted in Office / Retail / Industrial, Property Market / Real Estate

Tagged Office Rental, Office Space, Singapore Office, Singapore Office / Retail, Singapore Property

Orchard Road retail rents continue slide

Posted on 15 Sep 2009 | Comments Off

But competition for limited availability drives up Q3 prime suburban rents 0.7%

PRIME Orchard Road rents fell 3 per cent quarter-on-quarter to $32.90 per square foot per month (psf pm) in Q3 2009, a new report from CB Richard Ellis (CBRE) shows.

This is in line with the 2.9 per cent quarter-on-quarter fall in prime Orchard Road rents seen in Q2.

However, in a reversal of the rental trend, prime suburban rents inched up 0.7 per cent quarter-on-quarter to average $28.50 psf pm in Q3 2009, driven by competition for limited availability. In view of this, CBRE now expects prime suburban rents to contract by 1-2 per cent this year, compared with its earlier estimate of a 2-3 per cent contraction.

By contrast, CBRE is maintaining its forecast for a 10-12 per cent decline in prime Orchard Road rents for the whole of this year. Including a further decline of not more than 5 per cent expected for next year, the eventual rental trough for prime Orchard Road retail space should not be less than the $30 psf pm-level, the firm said.

‘The last time Prime Orchard Road rents fell below $30 psf pm was from 1998 to mid-2000, when the effects of the Asian Financial Crisis were most felt,’ noted the property firm in its report. ‘Since the turn of the millennium, prime Orchard Road rents have shown a certain resilience. Even during the global electronics downturn and Sars in 2002/2003, these rents did not dip below $31.50 psf pm.’ Continue reading →