Thought Leadership

As Singapore exits the pandemic and business activity returns to normal, corporate occupiers are placing more emphasis on employee productivity and on increasing office utilisation. With workplace transformation underway, there is strong demand to adapt and “build a better office” to meet the fast-evolving needs of employees and senior management. Additionally, occupiers should be actively identifying new opportunities and strategies to future-proof their portfolios.

CBRE's 2023 Singapore Office Occupier Sentiment Survey features insights from occupiers across various industries such as financial services, technology, media, telecoms and professional services etc.

Key findings include:

• Singapore's median utilisation rate stands at 64% and this is expected to increase further over the next 6 to 12 months.
• Leasing sentiment remains cautious in near term with more opting for lease renewals and re-negotiations but 45% expect to grow their corporate portfolios over next 3 years.
• Strong demand for green buildings but amount of green premium remains low. 67% would be willing to pay a premium of less than 5%.
• Staff-to-desk sharing ratios set to increase as more companies adopt flexible seating and hybrid working. 67% plan to increase desk sharing ratios over the next 2 years.

This report was originally published in https://www.cbre.com.sg/insights/viewpoints/2023-singapore-office-occupier-sentiment-survey

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• In Q1 2023, the industrial rental and price indices continued their tenth consecutive quarter of growth. The rental index rose by 2.8% QOQ, accelerating from 2.1% QOQ in the previous quarter, and marking the strongest quarterly growth since Q3 2013. Similarly, industrial prices rose by 1.5% QOQ, slowing slightly from the 1.7% QOQ registered last quarter.
• With a remaining supply of 10.3 mil sq ft in 2023, and an average of 10.9 mil sq ft from present till 2025, higher supply will continue to moderate rental and price growth but may also provide more options for occupiers.
• Industrial indicators remain soft, with continuous contractions recorded in manufacturing output, NODX and PMI.
• Trade tensions have resulted in industry players looking to fortify supply chains, with some looking to set up shop in Singapore, which will continue to prop up industrial demand.

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Rents in the region fell at a faster clip in Q2 2023, maintaining a year-long downward trend as Knight Frank’s Asia-Pacific Prime Office Rental Index dipped by a fourth consecutive quarter, down 1.6% quarter-on-quarter, in Q2 2023. This brings annual decline to 3.1%, which were largely due to continued soft conditions in the Chinese Mainland.

15 out of the 23 tracked cities reported stable-to-increasing rents, down from 16 in Q1 2023. Vacancies also rose marginally by a quarter of a percentage point quarter-on-quarter to 13.8%, sustaining a trend that has seen the metric rise to its highest in over 10 years since Q4 2022.

However, seen in the context of a delivery of over 4 million sf during the quarter, office demand in Asia-Pacific has held up better than those in US and Europe, with a stronger return-to-office trend. With tech occupiers continuing to rationalise employee headcount, financial and professional services firm as well as flexible space operators have made up the slack in leasing activity. Demand was also supported by a flight-to-quality trend that has pervaded across the region.

With the region entering a development phase, new supply in 2023-24 will clock in at cyclical highs, near doubling the levels in 2022, which will add close to 10% to existing stock. Consequently, market conditions across most of the region will continue to favour tenants for the rest of the year.

This report was originally published in https://apac.knightfrank.com/office-highlights

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• A worldwide shortage of available power is inhibiting growth of the global data center market. Sourcing enough power is a top priority of data center operators across North America, Europe, Latin America and Asia-Pacific. Certain secondary markets with robust power supplies stand to attract more data center operators.

• New development is occurring across all four regions despite limited power availability. Northern Virginia remains the world's largest data center market with 2,132 megawatts (MW) of total inventory.

• Despite new development, vacancy rates are declining in all four regions due to strong demand. Singapore—the world’s most power-constrained data center market—has less than 4 MW of available capacity and a record-low vacancy rate of less than 2%.

• Large corporations are finding it increasingly difficult to find enough data center capacity. Low supply, construction delays and power challenges are impacting all markets. For example, Querétaro, Mexico, has only 1.2 MW available for lease.

• The worldwide shortage of available supply is leading to price increases for data center capacity. Singapore has the highest rental rates at $300 to $450 per month for a 250- to 500-kilowatt (kW) requirement, while Chicago has the lowest at $115 to $125.

• The rapid growth of artificial intelligence—along with other modern technologies, such as streaming, gaming and self-driving cars—is expected to drive continued strong data center demand. This will spur innovations in data center design and technology as operators aim to deliver the capacity that meets the increased power density requirements of high-performance computing.

This report was originally published in https://www.cbre.com/insights/reports/global-data-center-trends-2023

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