CBD office rents continue subdued growth trajectory in 1Q2025
Local office space leas presented little adjustment in Q1 2025, based upon data compiled by JLL. The research discloses that CBD Quality A workplaces tracked by the consultancy reported a gross effective rent of $11.60 psf per month for the very first quarter, edging up just 0.5% q-o-q.
The flight to quality is set to drive demand 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 need will certainly spill over to Keppel South Central and the upcoming development of Shaw Tower.
The marginal development continues the controlled trajectory in workplace rents over the last four quarters. CBD leas expanded 0.4%, 0% and 0.7% q-o-q in 4Q2024, 3Q2024 and 2Q2024. “This marks the longest period of modest variant in rents since we started tracking this data collection,” says JLL in a March 26 press release.
Tangye is optimistic about office need, noting that MNCs in Singapore are progressively taking on a complete return-to-office model while the financial solutions sector is rebounding. Last November, Barclays revealed plans to establish Singapore as its second reservation centre for Asia Pacific private banking affairs, while Standard Chartered announced a development of its wealth management services in the city-state.
Due for finalization in 2026, the property development recently secured its very first occupant, co-working company The Great Room. The firm revealed earlier this month that it will open a 36,000 sq ft work space in the property following year.
Calvin Yeo, head of occupier strategy and remedies at Knight Frank, states that amidst international uncertainty, several occupiers are opting to restore leases at existing properties. At the same time, others are starting to look for quality office spaces as part of potential flight-to-quality relocations.
The forecasted growth in need are going to accompany a decrease in brand-new workplace supply following the completion 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 “assist moderate but sustained growth in office rents during this period”, he adds.
Situated in Tanjong Pagar, Keppel South Central was completed in very early February. At the time, Keppel revealed that almost 50% of the space had actually been dedicated or was under settlement. The building has actually also secured its very first anchor lessee, reportedly insurance company Manulife.
On The Other Hand, Knight Frank’s Yeo notes that in addition to Shaw Tower, no contributions to the market are expected in the near term. This might posture a challenge for large-footprint inhabitants, making relocations among such renters unlikely in the brief to medium term.
Offices in other locations islandwide presented q-o-q adjustments varying from -0.3% to 3.4%.
A different record by Knight Frank discovered that prime grade office rents in the Raffles Place and Marina Bay district remained the same from the last 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 attributes to the newly completed Keppel South Central.
He anticipates that most major global firms with workplaces in Singapore are going to remain in a holding pattern up until greater clarity arises on the global landscape. However, flight-to-quality actions might take place among some companies upon lease expiration as they look for to right-size or lower costs. Knight Frank also expects prime office rental development to range in between -1% to 2% for the entire of 2025.
“Although this relocation trend is not yet widespread, tenants are progressively taking into consideration cost-neutral options that consist of right-sizing and relocating to more modern workplace centers in order to reduce expense,” notes Yeo. On top of that, inhabitants may be incentivised to relocate as property owners provide subsidised fit-out costs or other benefits in a quote to maintain tenancy levels.
