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Office leasing market demand continues to be driven by the flexible workspace and technology sectors

  • CBD Grade A rents accelerated its decline to 2.3% QOQ in Q3 2020 to reach S$9.77 psf, versus 1.2% QOQ in Q2 2020. A further rental correction expected in Q4 2020
  • CBD Grade A vacancy rate increased 0.3pp to 4,9% as certain sectors hit hard by the pandemic had to return or reduce leased space
  • New demand in Q3 was mainly driven by flexible workspace operators; tech giants making Singapore their regional hub bode well for sentiment
  • 142,000 sq ft of flexible workspace to open the next coming three months
  • Total office or mixed developments' investment volumes declined by 35.8% QOQ to S$846 million in Q3; the transaction of Robinson Point recorded the highest price on a psf basis for an office building since the Straits Trading Building was sold in 2016
  • Unchanged long-term capital value growth QOQ at 2% p.a. versus long-term rental growth of 3.3%


SINGAPORE, 7 Oct 2020 – Colliers International (NASDAQ and TSX: CIGI), a global leader in commercial real estate services, has published its latest research report which examines the performance of the Singapore office property market in Q3 2020 and its prospects ahead.



Evaluating the data, Colliers Research notes that CBD Grade A gross effective rents continued to moderate further by 2.3% quarter-on-quarter (QOQ) to S$9.77 per square foot (psf) in Q3 2020, while Grade B rents slid 2.4% QOQ.

Tricia Song (宋明蔚), Head of Research for Singapore at Colliers International, said, “With the year-to-date (YTD) decline of 3.4% in CBD Grade A office rents, we expect to see further downside in Q4 2020.”

“Meanwhile, landlords continue to offer higher incentives, as leasing demand weakens further with the global economic slowdown. For example, rent-free periods for CBD Grade A offices have increased from 1.3 months to 1.5 months.”

Rick Thomas, Head of Occupier Services in Singapore at Colliers International, said, “With the recent government relaxation of work from home restrictions, occupiers who have already started strategising and rationalising their real estate portfolio will now act. Landlords are more willing to negotiate, while occupiers are in search of greater value.”

“We are optimistic and expect increasing activity in the office leasing market over the next few months.”

Office rents and vacancy, Q3 2020


Average Gross Effective Rents
(SGD psf pm)

QOQ Change (%)

YOY Change (%)

Vacancy (%)

Grade A (Premium Tier)





Raffles Place / New Downtown





Grade A

Raffles Place / New Downtown





Shenton Way / Tanjong Pagar





City Hall





Beach Road / Bugis





Orchard Road





CBD Grade A Average





City Fringe 7.53 -2.3% -4.7% 6.9%
 Suburban 4.97 -3.5%* -3.5%* 9.1%
Grade B
Raffles Place
8.48 -3.0% -3.8%* 6.4%
Shenton Way / Tanjong Pagar 7.96 -2.3% -4.4% 7.6%
Beach Road / Bugis 7.75 -2.1% -4.7%* 9.2%
Orchard Road 8.16 -2.2% -6.0% 18.2%
CBD Grade B Average 8.09 -2.4% -4.7%* 9.0%
City Fringe 6.64 -1.6% -6.1% 6.4%
Suburban 4.54 0.0% 0.0% 16.7%

Source: Colliers International
Note: Average gross effective rents are benchmarked to a full-floor space in mid-zone level; conservative figure tending towards lower-end of rental range for a property. Effective rent refers to average rate payable over the lease term after accounting for incentives.
* On a like-for-like basis

View chart for Singapore office rents and vacancy in Q3 2020

Vacancy and take-up

As expected, CBD Grade A vacancy expanded to 4.9% in Q3 2020 from 4.6% the previous quarter, as incremental new take-ups in recently completed buildings were negligible. Meanwhile, vacancies edged up in all micro-markets except Raffles Place/New Downtown’s premium buildings.

Demand driver in Q3 2020 continues to come from flexible workspace which had been previously committed.

WeWork and JustCo will open their branches at 30 Raffles Place (82,000 sq ft) and Centrepoint (60,000 sq ft) respectively in Q4 2020. The Great Room will also occupy 37,000 sq feet of space at the new 70% pre-committed Afro-Asia i-Mark building after its completion in Q4 2020, while The Executive Centre plans to move and expand into the two highest floors in One Raffles Quay North Tower in 2021.

Colliers also sees some tech giants planning to either expand their footprint or establish their presence in Singapore. ByteDance is reportedly planning to invest billions of dollars and recruit hundreds in Singapore as part of its global expansion. At the same time, Tencent intends to open a new office in Singapore that will be its regional hub for Southeast Asia.

Other tech companies such as Twitter and Rackspace also plan to expand their headcount in Singapore.

Mr Thomas added: “We see the flexible workspace sector being more and more sophisticated offering a more unique and bespoke service to a targeted audience, While some of the tech giants have a small presence in Singapore now, we can expect them to bloom in the years to come and improve the tech sector representation of the overall occupiers in Singapore.”


Investment Sales

Singapore remains attractive to investors despite a 35.8% QOQ decline in the total office or mixed office investment volumes to S$846 million in Q3 2020, which brings the rolling 12-month volume to S$4.0 billion, a 34.5% decline QOQ.

Notable Office Transactions


Price (SGD million)



Remaining Tenure

Robinson Point



Shenton Way /
Tanjong Pagar

ABI Plaza 200.0 2,162

Shenton Way /
Tanjong Pagar

Suntec City Tower One 10.6 3,443 City Hall

68 years

Central Plaza 135.7 1,490 City Fringe 70 years

Source: Colliers International
Note: Price of TripleOne Somerset at S$342 million is based on reported total asset value of S$1.14 billion

View chart for notable office transactions in Q3 2020


Jerome Wright, Senior Director, Capital Markets in Singapore at Colliers International, said, “In the third quarter, we saw Robinson Point being sold by Tuan Sing Holdings at the highest price on psf basis since the Straits Trading Building was sold in 2016. This transaction reflects investors’ appetite for quality, rare freehold office buildings as well as the long-term attractiveness of Singapore to investors.”

The average imputed capital value of CBD Grade A office properties declined 1.5% QOQ to S$2,468psf, in line with the rental declines in the quarter. Colliers’ valuation team, meanwhile, maintained cap rates unchanged at a range between 3.15% and 3.50% in Q3 2020.

Download our quarterly office report for Q3 2020 here.




Media Contact:

Annabelle Taylor