CBD office rents continue subdued growth trajectory in 1Q2025
A separate report by Knight Frank found that prime quality workplace rents in the Raffles Place and Marina Bay precinct stayed unmodified from the previous 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 completed Keppel South Central.
Tangye is optimistic about office need, noting that MNCs in Singapore are gradually adopting a full return-to-office model while the financial services field is recoiling. Last November, Barclays disclosed plans to set up Singapore as its second reservation centre for Asia Pacific private financial affairs, while Standard Chartered announced a growth of its wealth management programs in the city-state.
The flight to quality is set to drive demand for new office space. Andrew Tangye, head of workplace leasing and advisory at JLL Singapore, notes that IOI Central Boulevard Towers, completed in 2024, is nearing 80% dedication. As a result, he anticipates need will spill over to Keppel South Central and the forthcoming development of Shaw Tower.
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Local office space leas showed little adjustment in Q1 2025, based on information compiled by JLL. The research shows that CBD Grade An office spaces traced by the consultancy recorded a gross effective rent of $11.60 psf monthly for the very first quarter, edging up simply 0.5% q-o-q.
He anticipates that most significant global companies with workplaces in Singapore will continue to be in a holding pattern until higher clarity arises on the worldwide landscape. Nonetheless, flight-to-quality moves may take place amongst some services upon lease expiration as they look for to right-size or minimize costs. Knight Frank also anticipates prime office rental growth to range between -1% to 2% for the entire of 2025.
Located in Tanjong Pagar, Keppel South Central was completed in early February. At the time, Keppel announced that close to 50% of the space had actually been committed or was under settlement. The structure has actually also secured its very first anchor occupant, reportedly insurance firm Manulife.
Workplaces in some other locations islandwide showed q-o-q adjustments varying from -0.3% to 3.4%.
Meanwhile, Knight Frank’s Yeo notes that apart from Shaw Tower, no significant additions to the market are anticipated in the near term. This can posture a challenge for large-footprint occupiers, making movings among such tenants unlikely in the brief to medium term.
“Although this relocation pattern is not yet widespread, occupiers are progressively taking into consideration cost-neutral options that consist of right-sizing and moving to more modern workplace facilities in order to reduce cost,” notes Yeo. Furthermore, inhabitants may be incentivised to move as proprietors offer subsidised fit-out costs or other benefits in a bid to keep tenancy degrees.
The predicted development in demand are going to accompany a drop in new workplace supply following the completion of IOI Central Blvd Towers and Keppel South Central. “Supply of brand-new workplace is readied to be constricted in between 2Q25 and 2027,” states Chua Yang Liang, head of research and consultancy for JLL Southeast Asia. This would certainly “uphold modest but sustained growth in office rental fees throughout this duration”, he includes.
Calvin Yeo, head of occupier strategy and remedies at Knight Frank, claims that amid international uncertainty, lots of inhabitants are choosing to renew rent at existing properties. At the same time, others are starting to search for top quality office as part of prospective flight-to-quality moves.
The marginal growth continues the controlled movement in office rents over the last four quarters. CBD rental fees grew 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 started tracking this information series,” states JLL in a March 26 press release.
Due for completion in 2026, the development lately secured its initial renter, co-working provider The Great Room. The business announced earlier this month that it will open a 36,000 sq ft office in the establishment next year.
