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While office rents continued to drop in the downbeat market, tenants seized the opportunity for better relocation options, resulting in high activity in the leasing market during the month. However, landlords further softened their approach and adopted a more realistic stance in negotiating leasing terms to secure tenants, so the majority of tenants tended to renew their leases. As a result, new take-up of Grade-A office space was at an exceptional low level during the month, particularly in the CBD area.
Amid the challenging economic environment, cost-competitiveness remains a pressing consideration for tenants. Going into 2021, we therefore expect to see a continuing decentralisation trend. We also foresee rising demand for co-working space, as more companies, especially small and medium-sized enterprises (SMEs), which have been heavily impacted by the coronavirus-induced recession to actively explore flexible leasing options.
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The region’s property stocks lost ground in September as risk aversion gripped investors. ahead of a US Presidential election and continued concerns that a global economic recovery remains volatile.
The GPR/APREA Composite REIT Index lost 1.4% in September, snapping a string of monthly gains since April, underperforming the wider market which declined by a smaller 1.1%.
Supported by low interest rates and higher debt capacity, the region’s REITs are turning acquisitive and resuming stalled deals. According to Real Capital Analytics, the region’s REITs expended over US$4.1 billion in acquisitions in the third quarter, after posting a record low quarterly volume in the second quarter since 2010.
Download the Report Read MoreWhat’s the effect on investors when commercial tenants can’t pay their rent? For answers, we caught up with Bryan Reid, executive director on MSCI’s real estate solutions research team.
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