CBD office rents continue subdued growth trajectory in 1Q2025
Local office space leas presented little modification in Q1 2025, based on information collected by JLL. The research discloses that CBD Grade A workplaces traced by the consultancy recorded a gross efficient lease of $11.60 psf monthly for the very first quarter, outlining up simply 0.5% q-o-q.
Calvin Yeo, head of occupier strategy and options at Knight Frank, claims that amid global unpredictability, several occupiers are deciding to restore leases at existing properties. At the same time, others are starting to search for top quality office as part of possible flight-to-quality moves.
The trip to quality is set to drive demand for new office. Andrew Tangye, head of office leasing and advisory at JLL Singapore, notes that IOI Central Boulevard Towers, finished in 2024, is nearing 80% dedication. As a result, he expects need will certainly spill over to Keppel South Central and the upcoming development of Shaw Tower.
Tangye is confident about office demand, keeping in mind that MNCs in Singapore are progressively adopting a complete return-to-office model while the financial services industry is recoiling. Last November, Barclays showed plans to set up Singapore as its 2nd reservation centre for Asia Pacific exclusive financial operations, while Standard Chartered declared a development of its wealth management programs in the city-state.
Workplaces in some other areas islandwide presented q-o-q adjustments ranging from -0.3% to 3.4%.
The anticipated growth in demand are going to coincide with a decrease in brand-new workplace source following the finalization of IOI Central Blvd Towers and Keppel South Central. “Supply of brand-new office space is readied to be constricted in between 2Q25 and 2027,” says Chua Yang Liang, head of research and consultancy for JLL Southeast Asia. This would certainly “support moderate but sustained development in office rental fees during this duration”, he includes.
Due for completion in 2026, the development recently obtained its initial occupant, co-working company The Great Room. The firm introduced earlier this month that it will open up a 36,000 sq ft work area in the establishment following year.
He predicts that most significant global corporations with offices in Singapore will stay in a holding pattern up until greater clearness emerges on the worldwide landscape. However, flight-to-quality moves may occur amongst some organizations upon lease expiry as they look for to right-size or lower costs. Knight Frank also anticipates prime workplace rental development to range in between -1% to 2% for the entire of 2025.
Situated in Tanjong Pagar, Keppel South Central was completed in very early February. At the time, Keppel revealed that nearly 50% of the space had actually been committed or was under arrangement. The building has also safeguarded its very first anchor occupant, reportedly insurance company Manulife.
“Although this transfer fad is not yet prevalent, tenants are progressively considering cost-neutral options that include right-sizing and moving to more modern workplace centers in order to minimise cost,” notes Yeo. On top of that, inhabitants might be incentivised to relocate as landlords provide subsidised fit-out costs or other benefits in a proposal to keep occupancy levels.
The marginal growth continues the subdued movement in workplace rentals over the last four quarters. CBD rents expanded 0.4%, 0% and 0.7% q-o-q in 4Q2024, 3Q2024 and 2Q2024. “This marks the lengthiest duration of modest variant in rents since we started tracking this information series,” says JLL in a March 26 press release.
A separate report by Knight Frank found that prime quality office rents in the Raffles Place and Marina Bay district remained unmodified from the previous quarter, at $11.36 psf monthly in 1Q2025. At the same time, the CBD occupancy degree declined partially from 93.7% in the last quarter to 93.5% in 1Q2025, which Knight Frank attributes to the recently finished Keppel South Central.
On The Other Hand, Knight Frank’s Yeo notes that besides Shaw Tower, no significant additions to the market are expected in the nearby term. This could posture an obstacle for large-footprint occupiers, making relocations among such tenants unlikely in the brief to medium term.
