OFFICE rents in Singapore reached a 15-year high in the first quarter, defying the commercial property slump plaguing other major financial hubs.

Gross effective monthly rents for premium office space in the city’s central business district jumped to S$11.42 per square foot in the first three months of the year, indicated data released on Wednesday (Mar 27) by Jones Lang LaSalle (JLL). That is the most since the last quarter of 2008 and reverses a drop of 0.5 per cent in the prior two quarters.

The city-state has so far avoided a major downturn in the commercial real estate market, which is hitting the largest Western cities and regional rivals such as Hong Kong. The strength is underpinned by a widespread return-to-office push and a boom in private wealth. 

“Enquiry levels have risen, and these are stemming from firms in professional and financial services as well as the consumer goods sectors,” said Andrew Tangye, head of office leasing and advisory for JLL Singapore.

In addition, vacancies for prime office space reached a post-pandemic low of 5.3 per cent in the first quarter, compared with 5.5 per cent in the three months before, according to the data. 

Most leasing activity is still from small-to-mid sized tenants while large occupier demand remains weak, Tangye said. For instance, Meta Platforms will cut space in Singapore in the second half of this year.

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JLL estimates that tenants have not been secured for more than 1.5 million square feet (sq ft) of office space coming online in 2024 and 2025. More than three million sq ft of office space will be completed this year, according to estimates from the Urban Redevelopment Authority. That is more than three times the amount that entered the market last year. BLOOMBERG