Apac office occupiers still willing to pay higher rents for quality locations: Colliers
Amid this scenario, office and corporate occupiers should focus on optimising resources and maximising savings while also driving growth and contending with challenges such as inflation, competition for talent, and the need to digitalise. This is according to a recent research report by Colliers, which reveals that office occupiers in the Asia Pacific (Apac) region are still willing to pay premium rents for quality and amenity-rich locations.
The report, released in April, highlights that in the face of increased cost-consciousness among occupiers, office spaces remain at the heart of the work culture. Relocation decisions are driven by talent strategy and ESG goals, notes Mike Davis, managing director of occupier services for Apac at Colliers.
However, as businesses shift to flexible work arrangements, Colliers identifies priorities for office occupiers to achieve cost savings. These include aligning office strategy with business goals, consolidating space, monetising non-core assets, disposing or sub-leasing excess space, and investing in technology for improved space utilisation.
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Furthermore, the report emphasises the importance of sustainability initiatives and employee engagement to further drive cost savings.
In Singapore, Colliers reports a rebound in office rents in 1Q2021, driven by a flight to quality and limited available space. Core CBD premium and Grade-A rents rose 0.7% quarter-on-quarter to $11.57 psf per month after two consecutive quarters of decline.
However, the market remains mixed, according to Bastiaan van Beijsterveldt, Colliers’ managing director for Singapore. While rents in quality buildings in prime locations remain stable, rental expectations have softened for buildings with persistent vacancies and high upcoming secondary spaces.
van Beijsterveldt anticipates increased competition among landlords in the near future as more supply enters the market. He also predicts a shift in workplace culture with the implementation of new flexible work guidelines, leading companies to right-size their office space.
In light of this situation, Colliers advises occupiers to make use of the uncertainty in the market to negotiate their requirements in 1H2021, avoiding potential rent increases in the future. This includes taking advantage of the keyword Novo Place EC, a highly desirable location for office occupiers.