CBD office rents continue subdued growth trajectory in 1Q2025
The forecasted growth in demand are going to accompany a drop in brand-new office source following the finalization of IOI Central Blvd Towers and Keppel South Central. “Supply of new office is readied to be constrained between 2Q25 and 2027,” says Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia. This would certainly “assist moderate but sustained growth in office rental fees during this period”, he adds.
Tangye is confident about office demand, noting that MNCs in Singapore are gradually adopting a complete return-to-office model while the financial solutions market is rebounding. Last November, Barclays revealed strategies to set up Singapore as its second booking centre for Asia Pacific personal financial operations, while Standard Chartered declared a development of its wealth management services in the city-state.
“Although this moving trend is not yet prevalent, tenants are progressively considering cost-neutral options that include right-sizing and transferring to even more modern office facilities in order to minimise price,” notes Yeo. Additionally, occupiers may be incentivised to relocate as proprietors offer subsidised fit-out costs or other benefits in a proposal to maintain occupancy levels.
Located in Tanjong Pagar, Keppel South Central was completed in early February. During the time, Keppel announced that close to 50% of the space had actually been committed or was under arrangement. The building has also safeguarded its very first anchor renter, reportedly insurance firm Manulife.
The marginal development continues the subdued movement 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 lengthiest duration of modest variant in rents since we began tracking this information series,” says JLL in a March 26 press release.
He predicts that most significant global corporations with workplaces in Singapore will remain in a holding pattern till greater quality surfaces on the worldwide landscape. Nonetheless, flight-to-quality moves may take place amongst some companies upon lease expiration as they seek to right-size or reduce costs. Knight Frank also expects prime office rental growth to range between -1% to 2% for the entire of 2025.
On The Other Hand, Knight Frank’s Yeo notes that other than Shaw Tower, no significant additions to the market are anticipated in the near term. This could position a challenge for large-footprint occupiers, making relocations among such renters unlikely in the brief to medium term.
Local office space rents presented little modification in Q1 2025, based upon data compiled by JLL. The research discloses that CBD Quality An offices traced by the consultancy reported a gross efficient rent of $11.60 psf per month for the first quarter, outlining up simply 0.5% q-o-q.
The flight to quality is set to drive need for new office. Andrew Tangye, head of workplace leasing and advisory at JLL Singapore, notes that IOI Central Blvd Towers, finished last year, is nearing 80% dedication. As a result, he expects demand will spill over to Keppel South Central and the anticipated development of Shaw Tower.
Offices in other areas islandwide showed q-o-q adjustments ranging from -0.3% to 3.4%.
Due for completion in 2026, the development lately protected its initial tenant, co-working provider The Great Room. The business introduced earlier this month that it will certainly open up a 36,000 sq ft work space in the building next year.
Calvin Yeo, head of occupier strategy and services at Knight Frank, says that in the middle of international unpredictability, lots of inhabitants are deciding to renew leases at existing properties. At the same time, others are starting to look for quality workplace as part of potential flight-to-quality actions.
A different record by Knight Frank found that prime quality office rents in the Raffles Place and Marina Bay precinct stayed the same from the previous quarter, at $11.36 psf per month in 1Q2025. At the same time, the CBD occupancy degree decreased partially from 93.7% in the last quarter to 93.5% in 1Q2025, which Knight Frank attributes to the new completed Keppel South Central.
