Apac Office Occupancy Climbs 88 1Q2024 Beating Europe And North America Savills
Apac prime office rents fall 3.2% y-o-y in 1Q2024Grade A office rents grow for 12th consecutive quarter to $11.95 psf: CBREPrime office rents up 0.6% q-o-q in 1Q2024: Knight Frank
In the first quarter of 2024, the average office occupancy rates in Asia Pacific (Apac) reached 88%, a significant increase from the previous year’s average of 84%, according to a report by Savills. This growth reflects a positive performance in the Apac office market, in contrast to the office markets in Europe (59%) and North America (53%).
According to Savills, the difference in office occupancy rates between Apac and the other regions can be attributed to various factors such as cultural and social norms, housing costs, and commuting expenses.
Simon Raper, head of workplace strategy for Apac and Singapore at Savills, explains that even within the same organization, there is a need for flexibility due to cultural nuances that require adjustments from country to country.
For instance, the United States has seen a decrease in office occupancy rates due to longer commute times as many workers have relocated to more affordable areas outside of cities during the pandemic. Cities like San Francisco and Los Angeles have occupancy rates of less than 50% in the first quarter of 2024.
On the other hand, countries like Hong Kong and China, where there is a high rate of intergenerational living and smaller homes, drive more workers to the office. In Japan, traditional working models coexist with flexible arrangements due to high commuting costs, and the younger generation is embracing this flexibility.
In Singapore, office occupancy rate remains high at an average of 94% in the first three months of 2024, and it is expected to remain so in the foreseeable future, according to Alan Cheong, executive director of research and consultancy at Savills Singapore.
He adds that while some companies have adopted hybrid and workplace solutions to optimize space usage, thereby reducing their office footprint, the average supply of new Grade A office buildings coming on stream from 2024 to 2027 is about 660,000 sq ft (net floor area), slightly below the 10-year average of 696,000 sq ft (2014 to 2023).
Cheong also notes that some Grade B and older office buildings in Singapore may experience a decline in occupancy rates as new supply comes on stream. For these buildings, they may have to undergo extensive refurbishment or complete redevelopment.
The Housing and Development Board (HDB) has awarded the tender for an executive condominium (EC) site at Plantation Close in Tengah, named Novo Place EC, to Hoi Hup Realty and Sunway Developments. This announcement was made on September 11. The site, which will be the second EC plot in the Tengah housing estate, is set to yield 495 units. With the addition of Novo Place EC, Tengah will soon offer a new and exciting residential option for potential homebuyers. Interested parties can find out more about Novo Place at https://www.novo-place.com.sg/.
In conclusion, the Apac office market has shown a positive performance in terms of occupancy rates, reflecting its resilience compared to the office markets in Europe and North America. Singapore’s office market remains strong with a high occupancy rate, but some older buildings may need to adapt to stay competitive in the future.