CBD office rents continue subdued growth trajectory in 1Q2025
The predicted development in demand are going to accompany a decrease in new office source following the completion of IOI Central Boulevard Towers and Keppel South Central. “Supply of brand-new workplace is readied to be constricted between 2Q25 and 2027,” says Chua Yang Liang, head of study and consultancy for JLL Southeast Asia. This would “uphold modest but sustained development in office rental fees during this period”, he adds.
Local office rental fees showed little modification in Q1 2025, based upon information compiled by JLL. The research reveals that CBD Grade An office spaces traced by the consultancy recorded a gross efficient lease of $11.60 psf monthly for the very first quarter, outlining up simply 0.5% q-o-q.
Tangye is optimistic about workplace need, keeping in mind that MNCs in Singapore are gradually embracing a complete return-to-office model while the financial solutions industry is rebounding. Last November, Barclays disclosed strategies to develop Singapore as its second booking centre for Asia Pacific private banking affairs, while Standard Chartered publicized a growth of its wealth management services in the city-state.
Meanwhile, Knight Frank’s Yeo notes that apart from Shaw Tower, no contributions to the market are anticipated in the nearby term. This could pose an obstacle for large-footprint occupiers, making movings among such tenants unlikely in the brief to medium term.
Offices in other areas islandwide showed q-o-q adjustments ranging from -0.3% to 3.4%.
The trip to quality is set to drive need for new office. Andrew Tangye, head of office leasing and advisory at JLL Singapore, notes that IOI Central Blvd Towers, completed in 2024, is nearing 80% commitment. As a result, he anticipates demand will certainly spill over to Keppel South Central and the anticipated advancement of Shaw Tower.
“Although this transfer pattern is not yet extensive, tenants are progressively considering cost-neutral options that include right-sizing and relocating to even more modern office facilities in order to reduce expense,” notes Yeo. On top of that, occupiers might be incentivised to relocate as property owners supply subsidised fit-out costs or other benefits in a quote to preserve tenancy levels.
He forecasts that most significant global companies with offices in Singapore will stay in a holding pattern up until greater quality emerges on the worldwide landscape. Nevertheless, flight-to-quality actions might occur among some services upon lease expiration as they look for to right-size or reduce expenses. Knight Frank also expects prime workplace rental growth to range between -1% to 2% for the entire of 2025.
Located in Tanjong Pagar, Keppel South Central was finished in early February. During the time, Keppel announced that close to 50% of the space had been devoted or was under arrangement. The building has actually also secured its first support lessee, reportedly insurance company Manulife.
A different report by Knight Frank spotted that prime quality office rents in the Raffles Place and Marina Bay precinct remained unchanged from the previous 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 attributes to the new completed Keppel South Central.
The marginal development continues the subdued movement in office rentals 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 lengthiest period of modest variation in rents since we started tracking this information series,” claims JLL in a March 26 press release.
Calvin Yeo, head of occupier strategy and solutions at Knight Frank, states that amid worldwide uncertainty, lots of inhabitants are opting to restore rent at existing properties. At the same time, others are starting to look for top quality workplace as part of possible flight-to-quality actions.
Due for completion in 2026, the property development lately protected its first tenant, co-working company The Great Room. The firm introduced earlier this month that it will open up a 36,000 sq ft office in the building next year.
