Office Occupancy Rates To Stay In The 91-95% Range

Source : The Business Times, December 4, 2007

Occupancy levels for office space in Singapore will remain in the 91-95 per cent range over the next five years, CB Richard Ellis (CBRE) said in a new report released yesterday.

At the end of August 2007, potential supply of office space - the total of known supply from the private sector and awarded government land sales (GLS) sites as well as potential supply from expected future land sales - stood at some 10.8 million sq ft for 2007-2012, the property firm said.

This reflects a 147 per cent increase from the potential supply of 4.4 million sq ft identified at the beginning of 2007.

The potential supply works out to an average annual supply of 1.8 million sq ft for the next six years, exceeding the average supply of 1.5 million sq ft a year seen over the past decade.

CBRE said that an estimated 788,000 sq ft will come on stream in 2008, while the majority of the new space will enter the market in 2010-2011.

And based on projected average annual take-up of 1.6 million sq ft for 2007- 2012, even if full potential supply materialises, 'we anticipate relative equilibrium between supply and take-up over this period', CBRE said.

It said occupancy levels for office space will remain in the 91-95 per cent range over the next five years.

CBRE's report comes as other experts predict that Singapore could see an oversupply of office space going forward.

Citigroup, for example, warned in a report last week that Singapore is in danger of seeing an oversupply of office space from 2010 onwards.

Based on the bank's estimates, occupancy rates are likely to peak in 2008-09 and decline thereafter with the impending supply.

Prime office rents in Singapore averaged $12.60 per square foot per month (psf pm) in the third quarter of 2007, increasing 16.7 per cent quarter-on-quarter and 82.6 per cent year- on-year, CBRE's data shows.

Rents now exceed the 1990 historical high of $11.50 psf pm.

While further rental increases are expected, the pace of growth should ease, CBRE said.