CBD office rents continue subdued growth trajectory in 1Q2025
Local office rental fees presented little change in Q1 2025, based on information collected by JLL. The research shows that CBD Grade A workplaces traced by the consultancy reported a gross efficient rent of $11.60 psf monthly for the very first quarter, outlining up simply 0.5% q-o-q.
“Although this transfer pattern is not yet widespread, tenants are increasingly considering cost-neutral options that include right-sizing and relocating to even more modern workplace centers in order to reduce cost,” notes Yeo. Additionally, inhabitants might be incentivised to move as landlords offer subsidised fit-out costs or other advantages in a bid to preserve occupancy levels.
The marginal development continues the subdued trajectory in office rents over the last four quarters. CBD leas increased 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,” claims JLL in a March 26 news release.
Calvin Yeo, head of occupier strategy and remedies at Knight Frank, says that amid worldwide unpredictability, lots of inhabitants are choosing to restore rent at existing properties. At the same time, others are starting to search for high quality workplace as part of possible flight-to-quality moves.
Tangye is positive about office space need, noting that MNCs in Singapore are progressively embracing a full return-to-office model while the financial services sector is rebounding. Last November, Barclays revealed plans to set up Singapore as its 2nd reservation centre for Asia Pacific private financial affairs, while Standard Chartered declared an expansion of its wealth management programs in the city-state.
A different record by Knight Frank found that prime quality office rents in the Raffles Place and Marina Bay precinct remained unmodified from the last quarter, at $11.36 psf monthly in 1Q2025. At the same time, the CBD occupancy level decreased marginally from 93.7% in the last quarter to 93.5% in 1Q2025, which Knight Frank connects to the new finished Keppel South Central.
The flight to quality is set to drive demand for brand-new office. 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 foresees need will spill over to Keppel South Central and the upcoming advancement of Shaw Tower.
Located in Tanjong Pagar, Keppel South Central was finished in early February. At the time, Keppel introduced that nearly 50% of the space had been dedicated or was under arrangement. The building has actually also protected its very first anchor renter, reportedly insurance company Manulife.
Due for finalization in 2026, the property development recently obtained its first lessee, co-working company The Great Room. The company revealed earlier this month that it will certainly open up a 36,000 sq ft office in the building next year.
Workplaces in some other areas islandwide presented q-o-q adjustments ranging from -0.3% to 3.4%.
He forecasts that most significant global corporations with offices in Singapore will continue to be in a holding pattern until higher clearness arises on the global landscape. Nonetheless, flight-to-quality actions might happen among some organizations upon lease expiry as they look for to right-size or decrease costs. Knight Frank also expects prime office rental growth to range between -1% to 2% for the entire of 2025.
On The Other Hand, Knight Frank’s Yeo notes that in addition to Shaw Tower, no significant additions to the market are anticipated in the nearby term. This might pose a difficulty for large-footprint occupiers, making movings amongst such tenants unlikely in the brief to medium term.
The predicted development in need will accompany a decrease in brand-new office space source following the completion of IOI Central Boulevard Towers and Keppel South Central. “Supply of new workplace is readied to be constricted between 2Q25 and 2027,” says Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia. This would “sustain modest but sustained development in office rents during this duration”, he includes.
