Double trouble: Massive supply, weak demand hound office landlords in 2016

Blame it on downsizing banks.

After enjoying several quarters of strong rental growth, office landlords should start coming to terms with the fact that the leasing market will soften considerably in 2016.

A report by Deutsche Bank highlighted that a massive supply glut will be exacerbated by soft demand from the financial sector as companies continue to restructure and consolidate non-profitable business divisions.

In addition, some occupiers such as technology companies are being drawn to suburban business parks in favour of their campus-like environment as well as cost savings. 

“As such, the vacancy rate is expected to go up in the next two years given the wave of new completions expected in 2016. Recovery is expected in 2016 for key most markets while it is likely to remain subdued in Singapore due to a surge of new supply,” said Deutsche Bank.