AVERAGE monthly rent for offices in the Suntec, Marina Centre and City Hall area surged 37 per cent quarter on quarter in Q1 to $10.90 per sq ft, outstripping a 28 per cent gain in the Raffles Place area, says Knight Frank.
The Suntec, Marina Centre and City Hall micro-market - which includes the office towers of Suntec City, Millenia Singapore and Raffles City - was ‘relatively under-priced compared with the Raffles Place area during the run-up in office rents last year’, according to Knight Frank director (business space - office) Agnes Tay. ‘So it’s a case of catching up now.’
Q1 2007 average rent in Raffles Place was $10.90 psf, with Republic Plaza achieving $13 psf, says Knight Frank.
‘The rental performance of Grade A office buildings in other micro-markets was similarly upbeat,’ it says.
‘Average monthly rent in the Shenton Way and Robinson Road area rose 19 per cent quarter on quarter to $7.90 psf, while that in the Orchard Road area increased 9 per cent quarter on quarter to $8 psf. Average Grade A office rents maintained a chronically strong upward trend, charging ahead another 21 per cent quarter on quarter to $9.80 psf.’
As supply of vacant Grade A space dried up, demand filtered down to Grade B blocks in the CBD. As a result, average rent for Grade B space jumped 24 per cent quarter on quarter to $8.30 psf in Q1.
In the suburbs, the picture was mixed. Office rents in the west, including Alexandra Rd area, remained largely unchanged after showing the biggest rise among suburban locations in Q4 last year.
But the north such as Novena and Toa Payoh, and the east such as Tampines, posted quarter on quarter gains of 16 and 25 per cent to $6.10 psf and $5.30 psf respectively.
Knight Frank predicts a full-year 2007 increase of 50-60 per cent in average prime Grade A office rents to $14 psf. The Q1 increase was 20 per cent.
Island-wide, the average office rent increase will come in around 20-30 per cent, Knight Frank reckons.
Source : Business Times - 20 Apr 2007
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