Rents Prime Office Space Singapore 21 Higher Wider Grade Stock Savills
According to a recent report by Savills, Singapore has retained its position as the seventh most expensive city for office space in the world as of the second quarter of 2024. The consultancy’s latest Prime Office Costs report shows that the annual net effective occupier costs, which include rent and fit-out costs, for prime office spaces in Singapore were at US$146.07 psf ($193 psf) in the last quarter, representing a modest 0.3% increase compared to the first quarter of the year.
Sitting at the top of the list was London, with an annual net effective occupier cost of US$283.57 psf, a 4.2% increase from the previous quarter. Hong Kong was ranked second with US$230.93 psf, a 1% decrease from the first quarter, and New York Midtown came in third with US$202.72, reflecting a 3.7% increase from the previous quarter.
Further analysis of the report revealed that prime office rents in Singapore were 21% higher than those of the broader Grade-A office stock. The report defines prime offices as those that are within the top tier of Grade-A office spaces, commanding the highest 5% to 10% of rents in the market.
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In a global context, prime offices in North America had the highest premium over wider Grade-A stock in the second quarter of 2024, at 62.5%. In the Asia Pacific region, the premium stood at 33.7%, with markets like Sydney, Seoul, and Singapore showing relatively lower differentials. The report states that in these markets, prime offices may not have enough distinguishing factors such as amenities or prestige to justify a high premium, as they are already comparatively expensive due to their location in high-quality downtown buildings.
In contrast, the premium in the Europe, Middle East, and Africa region was much lower at 17.9%. This can be attributed to the growing rents in the broader Grade-A markets. However, in some Chinese markets, the premium exceeded 70%, driven by a steady demand for top-tier office spaces.
Savills predicts that the trend of tenants opting for prime office spaces will continue for the remainder of the year, despite the rising fit-out costs and macroeconomic uncertainties. The report also mentions that while rental rates are starting to ease from historical highs in some markets, the demand for prime office spaces remains strong, which will support the rental rates for such spaces in the future.