Healthy take-up in new Grade A office space, but rents to stay stable: Morgan Stanley
According to a February study review by Morgan Stanley, Singapore Grade A workplace rents are expected to stay stable in 2025, even as the office space market sees healthy take-up among new developments.
Previously this month, Keppel South Central, a 33-storey commercial high rise in Tanjong Pagar, acquired its temporary occupation authorization. In a Feb 10 statement, Keppel revealed nearly 50% of the workplace and retail space at the project was committed or being actively worked out.
IOI Central Boulevard Towers, a Grade A workplace development on Central Blvd in the CBD, is nearing full occupancy. Last month, The Edge Singapore disclosed that the newly completed project with 1.24 million sq ft of office space is approximately 75% committed.
In any case, while workplace market rents are expected to remain stable, Morgan Stanley expects rent reversions– referring to changes in rents upon the finalizing of a new rent out– to stay in the positive single-digit range this year.
Among the tenants at IOI Central Boulevard Towers is Morgan Stanley, the anchor occupant of the 48-storey West Tower. Amazon is going to occupy the entire 16-storey East Tower.
The firm mentions a few factors for its expectation: market leas tracked by CBRE remained steady last year even as IOI Central Boulevard Towers has actually been continuously leased up. Furthermore, anchor occupant rents, on a psf basis, often tend to be cheaper contrasted to other leases in just the very same structure. “So the brand-new lease at Keppel South Central is unlikely to put much upward stress on market rents,” the record reviews.
A mainstay tenant has also been acquired for the establishment, that is said to be Manulife, Morgan Stanley’s statement adds.
Morgan Stanley adds that much of the mainstay occupant take-up at new Grade An office complex appears to be driven by occupiers moving from older CBD buildings. This flight to quality can underpin higher vacancies in the secondary industry that could lead to disintegration of rental growth as property owners lower leas to fill up such rooms, the report elaborates.
Despite the resilient take-up, Morgan Stanley anticipates office market leas to stay secure in 2025. The company is trying to keep its Grade A workplace rental forecast unmodified at $12 psf per month for this year, comparable to the year just before.
