Growing demand for ESG-compliant offices expected in 2023: Savills

It will help offset impacts of economic woes on demand for office buildings.

Overseas tenants are expected to comply with ESG standards, which may not only affect buildings within their countries but also their offshore branches as well, including those operating in Singapore.

Savills said this growing demand for greener office buildings will heighten in 2023.

“As a result, tenants from countries with strict ESG standards may need to rent green-rated Grade A offices, even for their offshore branches,” said Savills.

Whilst economic challenges are expected to reduce demand, it could be mitigated due to the flight of MNCs to green-rated buildings.

Savills' basket of CBD Grade A offices have minimum green accreditation, and with inflation working its way through service charges and family offices setting up, overall gross rents may increase by 2% YoY.

However, some quarters may see no or slight negative QoQ rental changes among sub-grades of CBD Grade A offices.

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