Have fears of a rental meltdown in the office market finally subsided?

The Marina One project may boost leasing activity.

The office rental market has been stuck in the doldrums in the past months, and there has been an anticipation of a rental meltdown.

However, according to a report from Savills, fears of a rental meltdown have not only subsided but have now reversed and turned positive, largely because of the Marina One and other upcoming projects.

"This mega project, expected to complete in mid-2017 with 1.88 million sq ft of office space, registered a pre-commitment rate of more than 60%," Savills said, noting that new tenant for this development in Q1 took up large floor areas. For instance, Facebook is taking some 250,000 sqft.

Meanwhile, Frasers Tower, a new commercial development at Cecil Street, expected to be completed by Q2/2018, has secured its first office tenant, The Executive Centre.

"As mentioned previously, the overly bearish view towards the office rental market did not square with the strong take-up seen in Marina One. Consequently, major landlords of Grade A CBD office buildings regained confidence and took a chance on asking for higher rents, which we believe may hold for the next two-quarters," Savills said.