Shadow office space in Singapore is expected to rise amid global economic uncertainty that continues to plague occupier sentiment.
The stock of shadow office space islandwide was 285,000 square feet in Q2, up 32 per cent from Q1. It is expected to grow by 73,000 sq ft to nearly 360,000 sq ft by year-end.
Of the 285,000 sq ft of shadow space in the second quarter, 48 per cent was in Raffles Place.
Shadow space refers to excess space that occupiers have leased but are looking to assign or sublet to ease the rental burden.
The increase in shadow space comes at a time of declining average gross face rents for prime office space in the CBD for the second quarter. This, despite the pockets of demand from occupiers who view the current climate as opportune for upgrading to a better- quality space.
In Raffles Place, the average gross face rent for prime office space experienced a 3.1 per cent quarter-on-quarter decline to $9.50 per square foot (psf) per month. Similarly, rents on Shenton Way, Robinson Road and Cecil Street fell 2.6 per cent quarter-on- quarter to $7.55 psf per month.
Rents in the CBD are expected to continue being pressured, despite a lower- than-average net increase in supply of 1.1 million sq ft of office space in 2012, after taking into account existing buildings that have been or will be removed from the stock.
The average occupancy rate for office space at Raffles Place fell 0.7 percentage point in Q2 to about 92 per cent. However, on Shenton Way, Robinson Road and Cecil Street, the removal of Chow House from the stock in the quarter resulted in the occupancy rate rising 1.3 percentage points to about 95 per cent in Q2.
Source: Business Times – 28 June 2012