Office, retail rents down over 8% in 2016; office vacancies jump to 11.1%: URA (Amended)

RENTS and prices of commercial space in Singapore fell by a faster clip in 2016 compared to 2015, with office vacancies shooting up to a four-year high since Q1 2012.

Latest data from the Urban Redevelopment Authority (URA) released on Thursday showed that rents of office and retail space slipped over 8 per cent in 2016.

Office rents slipped for the seventh straight quarter by 1.8 per cent in the fourth quarter. This culminated in a 8.2 per cent fall for the whole year.

Similarly, retail rents continued its decline into the eighth consecutive quarter, sliding 1.2 per cent in the fourth quarter and 8.3 per cent for the whole year.

The declines were steeper than the 6.5 per cent drop for office rents and 4.1 per cent decline in retail rents in 2015.

Prices for retail space, however, saw an uptick of 0.2 per cent in the fourth quarter, compared to a 0.6 per cent decrease in the preceding quarter.

As for office prices, they continued to dip 0.6 per cent in the fourth quarter - a sixth straight quarter of decline.

Still, the full-year price declines of 2.8 per cent and 5.4 per cent for office and retail space were steeper than the 0.1 per cent and 0.8 per cent, respectively, seen a year ago.

The island-wide vacancy rate of office space at the end of the fourth quarter rose to 11.1 per cent from 10.4 per cent at the end of the previous quarter. But the island-wide vacancy rate of retail space dropped to 7.5 per cent from 8.4 per cent at the end of the previous quarter.

There was a total supply of about 786,000 square metres of office gross floor area (GFA) in the pipeline, compared with the 879,000 sq m GFA of office space in the pipeline in the previous quarter; the retail segment's pipeline consists of total supply of 595,000 sq m GFA, compared with the 652,000 sq m GFA of retail space in the pipeline in the previous quarter.

Amendment Note: An earlier version of this article incorrectly stated that Q4 2016 is a eighth straight quarter of decline for office prices. It is in fact the sixth straight quarter and the article above has been revised to reflect this.