Demand for prime office space continues to grow worldwide, despite a 0.3% rise in rents and a 0.2% increase in fit-out costs in the final quarter of 2024, according to Savills’ latest report. Singapore and Tokyo ranked sixth and fifth, respectively, in the Prime Office Costs Index, with Singapore experiencing a 0.5% cost growth. The finance sector has overtaken technology as the leading industry for office space deals in the second half of 2024.
Savills’ report highlights a moderate upward trend in office costs, with a 1.9% increase over the year. In Asia Pacific, net effective costs declined by 1% in Q4 2024, with China seeing a 2.6% drop due to economic uncertainties. Conversely, Sydney and Melbourne experienced cost increases of 1.7% and 1.6%, respectively, driven by reduced landlord incentives and rental growth.
Alan Cheong, Executive Director of Research & Consultancy at Savills Singapore, noted, “The rise in Singapore’s office cost continued in 2024 as supply of Grade A offices was relatively tight and fit-out costs have been pressured by higher labour costs.”
Globally, Dubai and Los Angeles saw significant cost increases, with Dubai experiencing a 7% rise due to constrained supply and high demand. In North America, Los Angeles reported the highest leasing volumes since Q1 2020, reflecting strong demand.
Rick Schuham, CEO of Global Occupier Services at Savills, stated, “Ultra prime offices remain a key strategic asset for many businesses globally and almost all industries saw an increase in square footage transacted in H2 2024 compared to the first half of last year.”
Looking ahead, Savills anticipates continued growth in rent and leasing volumes in 2025, driven by demographic and behavioural trends as firms compete for talent.
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