CBD office rents continue subdued growth trajectory in 1Q2025
Due for finalization in 2026, the development recently protected its first occupant, co-working provider The Great Room. The company revealed earlier this month that it will open up a 36,000 sq ft office in the building next year.
Calvin Yeo, head of occupier strategy and services at Knight Frank, states that amidst global unpredictability, several inhabitants are choosing to renew rent at existing premises. At the same time, others are starting to search for high quality workplace as part of prospective flight-to-quality steps.
The marginal development continues the subdued trajectory in office rents 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 period of modest variant in rents since we started tracking this information series,” says JLL in a March 26 press release.
A different record by Knight Frank found that prime grade workplace rents in the Raffles Place and Marina Bay precinct remained the same from the last quarter, at $11.36 psf each month in 1Q2025. At the same time, the CBD occupancy degree declined marginally from 93.7% in the last quarter to 93.5% in 1Q2025, which Knight Frank connects to the newly finished Keppel South Central.
Local workplace leas presented little adjustment in Q1 2025, based on data collected by JLL. The research reveals that CBD Grade A workplaces tracked by the consultancy recorded a gross effective rent of $11.60 psf monthly for the first quarter, edging up simply 0.5% q-o-q.
Workplaces in some other locations islandwide showed q-o-q changes ranging from -0.3% to 3.4%.
On The Other Hand, Knight Frank’s Yeo notes that apart from Shaw Tower, no significant additions to the marketplace are anticipated in the nearby term. This might posture a difficulty for large-footprint inhabitants, making relocations among such tenants unlikely in the brief to medium term.
The flight to quality is set to drive need for brand-new office space. Andrew Tangye, head of workplace leasing and advisory at JLL Singapore, notes that IOI Central Boulevard Towers, finished in 2024, is nearing 80% commitment. As a result, he expects need will certainly spill over to Keppel South Central and the forthcoming advancement of Shaw Tower.
The predicted development in need will accompany a decrease in new office space supply following the conclusion of IOI Central Blvd 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 study and consultancy for JLL Southeast Asia. This would certainly “support moderate but sustained development in office rental fees throughout this duration”, he adds.
Located in Tanjong Pagar, Keppel South Central was completed in very early February. During the time, Keppel revealed that nearly 50% of the space had been devoted or was under negotiation. The structure has also safeguarded its initial anchor lessee, reportedly insurance firm Manulife.
He anticipates that most major global corporations with workplaces in Singapore will continue to be in a holding pattern up until higher quality emerges on the worldwide landscape. Nevertheless, flight-to-quality actions might occur among some companies upon lease expiration as they seek to right-size or decrease expenses. Knight Frank also anticipates prime office rental development to range between -1% to 2% for the whole of 2025.
Tangye is hopeful about office space need, noting that MNCs in Singapore are progressively adopting a full return-to-office model while the financial solutions industry is rebounding. Last November, Barclays disclosed plans to develop Singapore as its second booking centre for Asia Pacific personal banking operations, while Standard Chartered publicized an expansion of its wealth management services in the city-state.
“Although this moving trend is not yet widespread, tenants are increasingly considering cost-neutral options that include right-sizing and moving to even more modern office facilities in order to minimise expense,” notes Yeo. On top of that, inhabitants may be incentivised to move as proprietors supply subsidised fit-out costs or other benefits in a bid to keep occupancy degrees.
