Net office demand in Singapore has increased in the second quarter of 2010 to its highest quarterly level since the third quarter of 2007.
Demand has increased approximately 68 percent from Q1 to 398,264 sq ft in Q2, according to figures released by the URA. The strong quarterly take-up has not been seen in the office market since Q3 2007, when there was a net demand of 646,000 sq ft.
The strong demand in the second quarter brought the first-half tally to approximately 635,000 sq ft. Based on estimates from CBRE, the full-year 2010 take-up could reach around 1.8 million sq ft, considering that the first phase of Marina Bay Financial Centre is 100-percent leased and pre-committed, an estimate that surpasses the 1.28 million sq ft average take-up during 2005 to 2009.
“This fast and furious recovery from the negative take-up of about 236,000 sq ft last year reflects the close correlation between economic growth and office demand,” said Li Hiaw Ho, executive director of CBRE.
Surging demand during the peak of the office market in 2006 and 2007 led to an increase in rents despite the supply shortage. As of now, there is still enough supply, with approximately 9.6 million sq ft in gross floor area of offices likely to be completed between Q3 2010 and 2013, based on URA figures.
“While some of this space is already pre-committed, much of it is still available. And don’t forget, some of the leasings at new buildings are a game of musical chairs being played as occupiers vacate older buildings. So right now there’s no shortage of space,” said Tan Tiong Cheng, chairman of Knight Frank.
Still, several market watchers have been asking the government to deal with the market’s concerns regarding a possible gap in office supply after 2013.
Mr. Tan believes that the policy of the government would be to launch office sites regularly through both the reserve and confirmed lists.