Average gross rents for Grade A offices in the Marina Bay area have commanded a premium of 17.5 per cent over those at Raffles Place in the first quarter of this year, reports MINDY TAN
EVEN as businesses are drawn south to Marina Bay from the "traditional" central business district (CBD), rents are expected to head north following a period of consolidation. Average gross rents for Grade A offices in the Marina Bay area commanded a premium of 17.5 per cent over those at Raffles Place in the first quarter of this year, at $10.12 per square foot (psf) per month, according to Cushman and Wakefield, versus $8.61 psf per month in the traditional CBD.
"Last year, the premium was about 16 per cent for the whole of 2012, but was more volatile," noted Sigrid Zialcita, managing director for Cushman and Wakefield's Asia-Pacific research team. "We believe that in current market conditions, the market is reverting to a premium of around the 17 per cent level, which is expected to rise once we see a sustained recovery in overall economic sentiment."
Moray Armstrong, executive director, office services at CBRE, noted that Marina Bay has historically commanded higher office rents. One of the factors driving demand is the large contiguous floor plates of more than 30,000 sq ft, which are ideally suited to the requirements of major multinational companies and financial institutions.
"Generally, the Grade A office market, which includes Marina Bay, has been enjoying relatively healthy take-up over the past few quarters," said Mr Armstrong.
"Occupier demand has diversified, with industries such as insurance, commodities, business services and the legal sector driving demand, complementing the financial industry which has remained relatively quiet. While the Grade A market rents have corrected close to 15 per cent from their previous peak in Q3 2011, most occupiers have taken advantage of this relative cost competitiveness to relocate into the best quality new developments."