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Tightened vacancies send office rents further up in Q3: CBRE

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VACANCIES tightened across all office sub-markets in Q3, which led to further rental growth over the period - ST PHOTO FILE

VACANCIES tightened across all office sub-markets in Q3, which led to further rental growth over the period.

A CBRE report released on Tuesday morning added that the upward trend in office rents is expected to remain over the next few quarters.

The island-wide vacancy rate dropped by 54 basis points quarter-on-quarter to reach 3.8 per cent in Q3.

The vacancy rates for the CBD Core, Fringe CBD and Decentralised sub-markets were 3.4 per cent, 5.6 per cent and 2.6 per cent respectively.

The Grade A market saw a "sizeable fall" in vacancy from 5.2 per cent to 4.3 per cent.

"These levels reflected vacancy rates last observed pre-global financial crisis," said CBRE.

This, in turn, meant an increase in rentals in Q3 - Grade A rents continued to lead the pack, growing 3.3 per cent quarter-on-quarter to reach S$10.95 psf/month.

The average Grade B (CBD Core) rent grew 2.4 per cent over the quarter to S$8.50 psf/month, while the average Grade B (island-wide) rent increased by 2.6 per cent to S$7.90 psf/month.

Added CBRE: "Underpinned by low vacancy and steady demand, the upward rental growth trajectory is projected to remain through the next few quarters. It is, however, possible that the pace of rental growth may ease by as early as H2 2015. The impact of the impending wave of supply is anticipated to arrive from mid-2016 through 2017."