Flexibility in business strategy and space
Q: Can you tell us what you saw happening in the office market last quarter?
As Singapore entered the Circuit Breaker on 7 April – which lasted until 1 June 2020 – we saw the onset of rental declines.
Starting from a higher base, Premium Grade A building rents slid 2.3% quarter-on-quarter (QOQ). As landlords were clearly focusing on tenant retention, there was – and still is – room to negotiate the prices down. We even saw rents going down as much as 10% for Grade B buildings for both renewals and new leases.
"The workplace has fundamentally changed forever, with remote working now a proven norm and flexible workspace options rising in popularity... This doesn’t mean this is the end of working in the office. This just means that the workplace is set to evolve."
In tandem, vacancy rose to 4.6% in Q2, from 3.1% in Q1, led by new completions. This will rise further as the year progresses and new supply enters the market. Our Research has forecasted vacancy could rise to 7.5% by end of 2020. This means we can expect rent to continue dropping.
Related content: Opportunities for Resilient Occupiers | Office Q2 2020 report
Q: What drove demand last quarter?
The demand driver last quarter was mainly the Flexible workspace sector, which had already committed to expand. New space take-up included JustCo’s 45,000 sq feet new branch opening at OCBC Centre East and Arcc Spaces’ 19,000 sq feet flagship centre at One Marina Boulevard.
Q: The Circuit Breaker period had forced most businesses to work from home or remotely. Do you think working from home will continue, even once the pandemic is over?
"A Flex-and-Core™ strategy provides flexibility – and the ability to quickly redeploy teams – so they continue to collaborate and be productive."
Q: Given all this, what can we expect for the office market in future?
"The demand for flexible workplaces is likely to grow further… The landscape will be competitive, providing opportunity for occupiers to seek space for relocation or expansion on favourable terms."
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