Rents For Small Offices Rise

Source : TODAY, Friday, October 5, 2007

THE average rent for a small prime grade A office space of less than 10,000 sq ft rose to $14.90 per square foot (psf) per month in the third quarter ended September this year.

According to property consultant Jones Lang LaSalle (JLL), this is close to the $15 psf psychological barrier mark and about 38 per cent above the $10.80 psf average rentals achieved in the CBD Core — a historic high that surpassed the previous peak of $9.90 psf in the previous quarter by 9.6 per cent for this category.

“With increasing occupancy costs, a number of banks and financial institutions have adopted a more conservative stance on their occupational plans, either expanding and restacking within their current locations or relocating part of their operations to either business parks or secondary-grade office spaces,” said Mr Chris Archibold, head of commercial leasing with JLL.

JLL said this trend of moving to fringe locations has seen the secondary-grade office space in the small-space category achieve the highest growth among all grades of office space. Rentals at high tech parks grew 22 per cent to close at an average of $3.05 psf while secondary grade offices witnessed an increase of 12.3 per cent to rise from $5.70 to $6.40 psf.

JLL said office demand spillover will be more evident in the coming months.

The Urban Redevelopment Authority will be releasing its third-quarter office rental statistics, based on official records of all rental transactions, at the end of this month.