CBD office rents continue subdued growth trajectory in 1Q2025
Calvin Yeo, head of occupier strategy and remedies at Knight Frank, says that amid global unpredictability, numerous inhabitants are deciding to renew rent at existing premises. At the same time, others are beginning to search for high quality office spaces as part of possible flight-to-quality relocations.
Workplaces in some other areas islandwide presented q-o-q changes varying from -0.3% to 3.4%.
The forecasted growth in need are going to accompany a drop in new workplace supply following the conclusion of IOI Central Blvd Towers and Keppel South Central. “Supply of brand-new office is readied to be constricted in between 2Q25 and 2027,” says Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia. This would “assist modest but sustained development in office rental fees throughout this duration”, he includes.
Due for completion in 2026, the development recently obtained its initial renter, co-working company The Great Room. The business introduced earlier this month that it will certainly open up a 36,000 sq ft work space in the property next year.
The trip 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 last year, is nearing 80% dedication. As a result, he anticipates demand will spill over to Keppel South Central and the anticipated advancement of Shaw Tower.
Tangye is optimistic about workplace demand, keeping in mind that MNCs in Singapore are progressively adopting a full return-to-office model while the financial services industry is recoiling. Last November, Barclays revealed plans to develop Singapore as its 2nd booking centre for Asia Pacific personal banking operations, while Standard Chartered publicized an expansion of its wealth management services in the city-state.
The marginal development continues the subdued trajectory 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 longest duration of modest variation in rents since we began tracking this data series,” says JLL in a March 26 news release.
He predicts that most significant global corporations with offices in Singapore are going to stay in a holding pattern until higher quality emerges on the worldwide landscape. Nonetheless, flight-to-quality moves might occur among some services upon lease expiration as they look for to right-size or minimize expenses. Knight Frank also expects prime office rental growth to range in between -1% to 2% for the whole of 2025.
Local workplace rental fees presented little adjustment in Q1 2025, based on information collected by JLL. The research reveals that CBD Grade An offices traced by the consultancy recorded a gross effective rent of $11.60 psf per month for the very first quarter, outlining up simply 0.5% q-o-q.
Found in Tanjong Pagar, Keppel South Central was completed in very early February. At the time, Keppel introduced that almost 50% of the space had been dedicated or was under arrangement. The building has also secured its very first anchor renter, reportedly insurance firm Manulife.
Meanwhile, Knight Frank’s Yeo notes that apart from Shaw Tower, no significant additions to the market are expected in the near term. This could position an obstacle for large-footprint occupiers, making movings among such renters unlikely in the short to medium term.
“Although this relocation pattern is not yet extensive, occupiers are significantly thinking about cost-neutral options that include right-sizing and moving to more modern office centers in order to minimise expense,” notes Yeo. On top of that, occupiers may be incentivised to move as proprietors supply subsidised fit-out costs or other advantages in a bid to maintain occupancy levels.
A different record by Knight Frank found that prime grade office rents in the Raffles Place and Marina Bay district stayed unchanged from the previous 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 attributes to the newly finished Keppel South Central.
