SINGAPORE (EDGEPROP) – In 10 years, cities in the US are likely to have the highest future office availability compared to their counterparts in the Asia Pacific region, where excess office supply is on track to be the lowest worldwide. This was the broad trend outlined in the Savills Future Office Availability Index.
The index by Savills explores office use trends and how it intersects with projected economic growth, demographics, development pipelines, and volumes of environmentally sustainable office stock.
In Singapore, a growing number of employees are returning to the office, led by firms in banking and finance. Companies from China, Japan, and Korea are also setting up locations in the city-state. But Savills notes that technology firms continue to embrace flexible working policies.
The office environment in Singapore will see more hybrid models as companies vie to retain millennial and Gen Z staff who value remote work, and occupiers seek to reduce rental overheads, says Alan Cheong, executive director of Savills research and consultancy.
“While office space in most developed economies faces excess supply in the coming years, Singapore remains a relatively tight market due to a lack of new supply, which offsets the expected decrease in demand as companies adopt hybrid work models”.
The new office supply in Singapore was stable between 2020 to 2022. This year, despite the influx of 1.9 million sq ft of net lettable area (NLA) of new space, about 1.26 million sq ft is attributed to one project, IOI Central Boulevard. From 2024 to 2028, the projected new office supply stands at 3,196,000 sq ft NLA, based on Savill’s research.
While the post-pandemic environment has led to a global reassessment of office requirements, the results are far from uniform worldwide, says Savills World Research associate Kelcie Sellers.
In the US, key cities such as San Francisco, New York and Los Angeles have a higher potential to see increased office availability. For example, pre-Covid, San Francisco had one of the lowest office availability rates in the US at 9.5%. In the current climate, 30% of its office space is vacant or due to return to the market in the next year, representing a 30-year high availability rate.
“Singapore’s office market may buck the trend observed in the US, as local authorities manage the supply of land available for large-scale office developments,” says Savills Singapore CEO Marcus Loo. “The narrative (of the local office market) will revolve around a limited supply-driven market and the increase in secondary stock”.
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