Healthy take-up in new Grade A office space, but rents to stay stable: Morgan Stanley
Morgan Stanley adds that significantly of the anchor lessee take-up at brand-new Grade An office buildings appears to be steered by occupiers moving from older CBD structures. This flight to quality can underpin higher vacancies in the second market that might lead to erosion of rental growth as property owners lower leas to fill such rooms, the report clarifies.
According to a February research study report by Morgan Stanley, Singapore Grade A workplace rents are expected to stay secure in 2025, even as the workplace market sees healthy take-up among new growths.
The firm cites a couple of reasons for its overview: market rental fees tracked by CBRE remained steady last year maybe even as IOI Central Blvd Towers has been steadily contracted up. On top of that, anchor lessee hires, on a psf basis, tend to be lower compared to other leases within the very same building. “So the new lease at Keppel South Central is not likely to place much higher stress on market hires,” the record reviews.
Previously this month, Keppel South Central, a 33-storey commercial high rise in Tanjong Pagar, attained its short-term occupation permit. In a Feb 10 report, Keppel announced almost 50% of the office and retail spot at the project was committed or being actively worked out.
Despite the resilient take-up, Morgan Stanley expects office market rental fees to remain steady in 2025. The company is trying to keep its Grade A business office rental foresight unchanged at $12 psf per month for this year, comparable to the year prior to.
Regardless, while office industry leas are expected to remain stable, Morgan Stanley expects rental fee reversions– describing changes in rental fees upon the signing of a new lease– to remain in the favorable single-digit range this year.
Among the occupants at IOI Central Boulevard Towers is Morgan Stanley, the mainstay lessee of the 48-storey West Tower. Amazon is going to occupy the overall 16-storey East Tower.
A mainstay renter has also been secured for the building, that is said to be Manulife, Morgan Stanley’s report includes.
IOI Central Blvd Towers, a Grade A workplace property development on Central Blvd in the CBD, is nearing complete occupancy. Last month, The Edge Singapore reported that the freshly finalized project with 1.24 million sq ft of office space is approximately 75% committed.
