Business & Economy Property Singapore's rising office rents will spur occupiers to accelerate activity based working...

Singapore’s rising office rents will spur occupiers to accelerate activity based working in 20




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According to occupier respondents in the CBRE Asia Pacific Occupier Survey 2018, rising office rents in Singapore will motivate more companies to actively explore activity based working, signaling their intent to embrace change in the market. The survey said that rapid technological innovation, evolving workplace concepts, and shifting employee expectations are becoming the new normal for regional commercial real estate, with these trends likely to spur ongoing office market growth for the next 24 months.

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Companies generally hold a positive view towards expanding their Asia Pacific office portfolio over the next two years. According to survey results, 45% of respondents plan to expand, while 28% anticipate a reduction, although a large portion of the latter figure likely includes companies planning to grow by improving space utilization. China and India remain the most preferred markets for expansion, followed by Singapore. The rising trajectory on Singapore’s office rents will motivate more companies to actively explore activity based working.


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David McKellar, Executive Director and Head of CBRE’s Advisory & Transaction Services Office Occupier team in Singapore, said “The drive for employee engagement and productivity gains through activity based working will continue to gain momentum in Singapore in 2018, as will an enhanced adoption of technology. Active sectors, such as tech, co-working and banking & finance, have accounted for much of the overall recent office absorption. This has resulted in an aggressive uplift in rents and landlord sentiment.

“To mitigate the rising occupancy cost base for tenants, efficiency gains in space utilisation will be an area of focus. Lease renewals will likely be evaluated alongside more efficient, agile workplace alternatives.” Mr McKellar added. Singapore’s office rents have grown 8.4 per cent since the bottoming out in mid- 2017, and are expected to continue to appreciate through to 2021.

According to occupiers, three major trends will drive decision-making across Asia Pacific over the coming 24 months.
Solid Portfolio Expansion

  • 45% of respondents plan to increase their corporate real estate portfolios in Asia Pacific in the next two years.
  • Leasing space in existing buildings is the preferred means for companies to increase their footprint. Firms are also pursing built-to-suit opportunities and pre-committing to new buildings.
  • Flexible office solutions are increasingly popular, with 33% of occupiers planning to increase their use of co-working space.

Acceleration of Workplace Evolution

    • The adoption of Activity-based Working (ABW) will increase to 78% over the next two years. Workplace settings and policies will see greater refinement.
    • Collaboration remains the key driver of workplace strategy but an increasing number of companies are placing a stronger focus on achieving the by-products of collaboration, such as innovation and creativity.
    • Companies are implementing space utilization analytics for more refined space planning.
    • Increased focus on “Me” space for individual tasks to balance out collaboration spaces.

New Era of Technology

    • 78% of respondents plan to increase their investment in workplace technology to enhance end-user experience.
    • Priorities for investment include apps for meeting rooms and desk booking; connected sensors; and predictive analysis.
    • Biometric authentication and air purification technology are the key features occupiers expect landlords to provide.
    • The use of predictive analytics to provide a mechanism enabling occupiers to identify critical workplace needs and drive effective decisions is set to become more prominent.

“Occupiers are looking beyond traditional leasing considerations, like location and building quality, when expanding real estate portfolios. Many occupiers are driven by their desire for customized office buildings projecting strong brand image, space efficiency and enhancing employee wellbeing,” says Ada Choi, Executive Director of Research, CBRE Asia Pacific.

As a result of this trend and to mitigate rising office rents, landlords will increasingly serve as enablers of change and adapt to new demands in greater numbers. Landlords are structuring flexible lease terms to include flexible space providers as tenants, and further considering the specific needs and potential users of space at the project planning stage.

Commercial spaces shows continued signs of recovery

The third annual CBRE Asia Pacific Occupier Survey polled 50 corporate real estate executives from multinationals and large Asian corporates from October to December 2017. All respondents oversee their respective organization’s regional and/or global real estate portfolio.

Most respondents held positions with companies headquartered in North America (36%), with the remainder evenly split between Europe (32%) and Asia Pacific (32%). Major sectors included technology, media and telecommunications (30%), banking and finance (22%) and petroleum, oil and gas (10%). Flexible space providers were also included for the first time.

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