Office occupancy rate to slide to 88-90% by 2017

5m sq ft of new supply expected.

According to Maybank Kim Eng, in 2016-2017, occupancy rate could slide to 88-90% as ~5m sq ft of new office space becomes available.

Here's more:

While we anticipate a reprieve from new office space next year, the fact remains that there is still ample supply – an estimated 6.4m sq ft of net leasable area in the Central Business District (CBD) is expected to come on-stream in 2014-2017.

With the labour market moderating and overall hiring expectations on the wane, we do not think headcount numbers will jump sharply this year, especially considering the sub-trend GDP growth and financial services activities remaining sluggish.

We estimate net absorption during this year and next would balance out previous outstanding (~4.8m sq ft in the Central Area) and new incoming supplies, leading to an occupancy rate of 90-92% in the Downtown Core (4Q13: 90%).