CBD office rents continue subdued growth trajectory in 1Q2025
Calvin Yeo, head of occupier strategy and services at Knight Frank, states that amid international uncertainty, many inhabitants are opting to restore rent at existing premises. At the same time, others are starting to look for quality office as part of possible flight-to-quality steps.
A different report by Knight Frank spotted that prime grade office rents in the Raffles Place and Marina Bay precinct stayed the same from the last quarter, at $11.36 psf each 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 connects to the new completed Keppel South Central.
On The Other Hand, Knight Frank’s Yeo notes that other than Shaw Tower, no contributions to the marketplace are anticipated in the near term. This might position an obstacle for large-footprint inhabitants, making movings amongst such renters unlikely in the brief to medium term.
Due for finish in 2026, the property development recently obtained its first renter, co-working provider The Great Room. The company revealed earlier this month that it will open a 36,000 sq ft workspace in the building next year.
The forecasted development in need are going to accompany a drop in new workplace supply following the completion 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 study and consultancy for JLL Southeast Asia. This would “support moderate but sustained growth in office rents throughout this duration”, he includes.
Tangye is optimistic about office space need, keeping in mind that MNCs in Singapore are gradually taking on a complete return-to-office model while the financial solutions sector is recoiling. Last November, Barclays disclosed strategies to set up Singapore as its second booking centre for Asia Pacific exclusive banking affairs, while Standard Chartered declared an expansion of its wealth management programs in the city-state.
He anticipates that most major global corporations with offices in Singapore are going to remain in a holding pattern till higher clearness arises on the global landscape. Nonetheless, flight-to-quality moves might occur among some services upon lease expiry as they seek to right-size or reduce prices. Knight Frank also anticipates prime workplace rental development to range in between -1% to 2% for the whole of 2025.
The marginal growth continues the controlled trajectory in workplace 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 lengthiest duration of modest variant in rents since we began tracking this data collection,” claims JLL in a March 26 press release.
The flight 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 Blvd Towers, finished last year, is nearing 80% dedication. As a result, he foresees need will spill over to Keppel South Central and the anticipated advancement of Shaw Tower.
Found in Tanjong Pagar, Keppel South Central was finished in very early February. During the time, Keppel announced that nearly 50% of the space had actually been devoted or was under arrangement. The structure has also secured its very first support tenant, reportedly insurance firm Manulife.
“Although this relocation pattern is not yet prevalent, tenants are increasingly considering cost-neutral options that consist of right-sizing and transferring to even more modern workplace centers in order to minimise expense,” notes Yeo. In addition, inhabitants might be incentivised to move as property managers provide subsidised fit-out costs or other advantages in a bid to maintain occupancy levels.
Local office rents showed little change in Q1 2025, based upon information compiled by JLL. The research discloses that CBD Grade An offices tracked by the consultancy documented a gross efficient lease of $11.60 psf per month for the very first quarter, edging up just 0.5% q-o-q.
Offices in other locations islandwide presented q-o-q adjustments varying from -0.3% to 3.4%.
