Decentralised office rents fall as firms relocate to CBD: JLL

Despite ongoing economic and geopolitical uncertainties, CBD office rents edged up again in 2Q2025. Grade A gross effective rents rose 0.7% q-o-q to $11.69 psf per month, marking a fifth straight quarter of sub-1% growth, according to JLL.

In contrast, office rents in the decentralised sub-market recorded a decline in 2Q2025, its first fall in four years. Rents in the market fell 0.8% q-o-q to $7.61 psf per month last quarter. “This decrease is attributed to ongoing rightsizing efforts and tenants relocating to, or closer to, the CBD, motivated by the increased availability of space,” JLL adds. 

CBD and decentralised office rent growth (q-o-q)

Source: JLL

Andrew Tangye, head of office leasing and advisory at JLL Singapore, says a growing trend of “strategic recentralisation” and “quality-driven relocations” to offices in the CBD. “Many businesses in Singapore are evolving toward higher-value offerings and enhanced service models, causing a migration of some office demand from decentralised locations to CBD premises that better accommodate their increasingly sophisticated and client-oriented operations,” he adds.

One example is Audi Singapore, which recently relocated its offices from Aperia on Kallang Avenue to Capital Square in the CBD. The move coincided with the showroom’s shift from Alexandra Road to 18 Cross Street, just a short walk from Capital Square, says Tangye.

More companies may be compelled to relocate to the CBD due to  “the current lack of a substantial rent gap between CBD and decentralised offices”, says Dr Chua Yang Liang, JLL’s head of research and consultancy for  Southeast Asia. Currently, the average rent gap between investment-grade offices in the CBD and the decentralised sub-market stands at around 30% to 35%, which Chua says is below the historical 50% to 60% range.

As relocations continue to support demand, office rents in the CBD are expected to remain modest, with JLL predicting full-year growth of 2% this year. However, rents may pick up in 2025, amid limited supply. “No major office completions are anticipated for the next 12 months, with the new Shaw Tower only coming onstream in 2H2026,” notes Chua.

The redevelopment of 79 Anson Road, which could commence next year, is expected to compound supply constraints further, he adds. 

Meanwhile, Tangye believes landlords with vacant space are focusing on boosting occupancy and stabilising portfolios ahead of 2026, when rents may start rising again before new supply enters the market in 2028. He adds: “By implementing targeted property enhancements, including modernised lobbies and washrooms, along with the restoration and renovation of outdated office areas, property owners are positioning themselves to attract premium tenants and capitalise on the anticipated rental growth opportunities.”