By EMILYN YAP

Some property consultants reckon the worst is over for falling office rents. And one even expects net take-up of space to turn positive by the fourth quarter of this year if the economy does reasonably well.

Cushman & Wakefield's mid-Q3 analyses show the decline in prime office rents has slowed. For instance, Raffles Place Grade A office rents fell 18 per cent from $10.61 in Q1 to $8.70 in Q2. But since then, they have dipped just 2.9 per cent to $8.45.

The same trend is showing up for prime office rents in the Shenton area. They have dropped 5.8 per cent from Q2 to $6.32 - a smaller decline compared with the 17.9 per cent drop from $8.17 in Q1 to $6.71 in Q2.

The prime office vacancy rate at mid-Q3 is 6.1 per cent, up 0.4 of a percentage point from Q2.

'As economic conditions continue to stabilise, we will see the flow-through to improved space absorption happening over the next few months,' said Cushman & Wakefield research director Ang Choon Beng.

'On a more optimistic note, if Singapore's GDP performance comes in at the better end of current estimates, we could potentially see positive space absorption by Q4 2009.'

Singapore's Q2 GDP jumped 20.7 per cent quarter-on-quarter but the government remains fairly guarded, keeping its GDP forecast for the year at a contraction of 4 to 6 per cent.

Net take-up of office space here has been negative for three consecutive quarters since Q4 2008 - a result of weakening demand for office space and rising supply.

Other consultants that BT spoke to agree that office rents have fallen at a slower pace, but are more conservative about the strength of space absorption for the rest of the year.

'It's probably a little bit early to forecast positive take-up over the second half,' said CB Richard Ellis's executive director for office services Moray Armstrong. For one thing, some companies may have introduced downsizing plans that will only take effect in the months ahead, he said.

There could still be downward pressure on rents in the next few quarters and positive take-up of space might not emerge until next year, he added.

Jones Lang LaSalle's head of markets in Singapore Chris Archibold is also cautious about where net take-up could head in Q4. 'There are little bits of expansion here and there but they are very few and far between at the moment . . . and we're still seeing some organisations downsizing,' he said.

All three consultancies reckon a game of musical chairs is going on in the office market - leasing activity has been dominated by companies relocating for better propositions, such as more competitive rents or more efficient floor plates. As BT reported last week, several firms are moving to new buildings such as Mapletree Anson and Straits Trading Building.

This article was first published in The Business Times.