Reworking Lease Expires

CONDITIONS CHANGE OVER TIME

Forecast levels of over- or under-renting for leases expiring in 2023-27

• It is important to continually monitor market conditions, especially the direction and amount of rental change. Current analysis (slide 7) shows that 76% of markets are currently over-rented, where lease rents are higher than market rents. • However, this shifts over time such that by 2026, only 60% of markets are over-rented. This should be a signal to tenants to examine their lease rents now while conditions are favourable. • Occupiers should also consider the year-to-year changes. The highest level of over-renting (biggest discount between market rents and leases) in Shanghai is occurring now. Similarly in Melbourne, the highest over-renting is now, though the market remains over-rented through to 2027. • In contrast, the level of under-renting in Singapore is forecast to increase over H2 2024, suggesting tenants with forthcoming leases expires should act sooner rather than later.

20%

Under-rented

10%

0%

-10%

-20%

-30%

Over-rented

-40%

Lease expiry period

Melbourne

Shanghai

Singapore

Source: Cushman & Wakefield

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