CBD office rents continue subdued growth trajectory in 1Q2025

Local office rents showed little change in Q1 2025, based on data compiled by JLL. The research reveals that CBD Grade A offices tracked by the consultancy recorded a gross effective rent of $11.60 psf per month for the first quarter, edging up just 0.5% q-o-q.

The marginal growth continues the subdued trajectory in office rents over the last four quarters.  CBD rents grew 0.4%, 0% and 0.7% q-o-q in 4Q2024, 3Q2024 and 2Q2024. “This marks the longest period of modest variation in rents since we began tracking this data series,” says JLL in a March 26 press release.

Monthly gross effective rents and vacancy for CBD Grade A office space

Source: JLL Research

A separate report by Knight Frank found that prime grade office rents in the Raffles Place and Marina Bay precinct stayed unchanged from the previous quarter, at $11.36 psf per month in 1Q2025. At the same time, the CBD occupancy level declined marginally from 93.7% in the last quarter to 93.5% in 1Q2025, which Knight Frank attributes to the newly completed Keppel South Central. 

Located in Tanjong Pagar, Keppel South Central was completed in early February. At the time, Keppel announced that nearly 50% of the space had been committed or was under negotiation. The building has also secured its first anchor tenant, reportedly insurance firm Manulife.

Offices in other areas islandwide showed q-o-q changes ranging from -0.3% to 3.4%.

Calvin Yeo, head of occupier strategy and solutions at Knight Frank, says that amid global uncertainty, many occupiers are opting to renew leases at existing premises. At the same time, others are beginning to search for quality office spaces as part of potential flight-to-quality moves.

“Although this relocation trend is not yet widespread, occupiers are increasingly considering cost-neutral options that include right-sizing and moving to more modern office facilities in order to minimise cost,” notes Yeo. In addition, occupiers may be incentivised to move as landlords offer subsidised fit-out costs or other benefits in a bid to maintain occupancy levels.

The flight to quality is set to drive demand for new office space. Andrew Tangye, head of office leasing and advisory at JLL Singapore, notes that IOI Central Boulevard Towers, completed last year, is nearing 80% commitment. As a result, he anticipates demand will spill over to Keppel South Central and the forthcoming development of Shaw Tower.

Due for completion in 2026, the development recently secured its first tenant, co-working provider The Great Room. The firm announced earlier this month that it will open a 36,000 sq ft workspace in the building next year.

Tangye is optimistic about office space demand, noting that MNCs in Singapore are progressively adopting a full return-to-office model while the financial services sector is rebounding. Last November, Barclays revealed plans to establish Singapore as its second booking centre for Asia Pacific private banking operations, while Standard Chartered announced an expansion of its wealth management services in the city-state.

The predicted growth in demand will coincide with a drop in new office supply following the completion of IOI Central Boulevard Towers and Keppel South Central. “Supply of new office space is set to be constrained between 2Q25 and 2027,” says Chua Yang Liang, head of research and consultancy for JLL Southeast Asia. This would “support moderate but sustained growth in office rents during this period”, he adds.

Meanwhile, Knight Frank’s Yeo notes that aside from Shaw Tower, no significant additions to the market are expected in the near term. This could pose a challenge for large-footprint occupiers, making relocations among such tenants unlikely in the short to medium term.

Selected upcoming office supply islandwide

He predicts that most major global corporations with offices in Singapore will remain in a holding pattern until greater clarity emerges on the international landscape. However, flight-to-quality moves may occur among some businesses upon lease expiry as they seek to right-size or reduce costs. Knight Frank also expects prime office rental growth to range between -1% to 2% for the whole of 2025.