CBD office rents continue subdued growth trajectory in 1Q2025
The flight to quality is set to drive need for brand-new office. Andrew Tangye, head of workplace leasing and advisory at JLL Singapore, notes that IOI Central Boulevard Towers, completed in 2024, is nearing 80% commitment. As a result, he anticipates need will certainly spill over to Keppel South Central and the forthcoming development of Shaw Tower.
Due for completion in 2026, the development recently obtained its very first renter, co-working company The Great Room. The company introduced earlier this month that it will open a 36,000 sq ft office in the property following year.
Calvin Yeo, head of occupier strategy and services at Knight Frank, says that amid international unpredictability, lots of occupiers are deciding to restore leases at existing premises. At the same time, others are starting to search for high quality office spaces as part of possible flight-to-quality relocations.
Located in Tanjong Pagar, Keppel South Central was completed in early February. At the time, Keppel introduced that nearly 50% of the space had actually been dedicated or was under negotiation. The structure has also secured its first support tenant, reportedly insurance firm Manulife.
Tangye is positive about office need, keeping in mind that MNCs in Singapore are progressively adopting a complete return-to-office model while the financial services industry is recoiling. Last November, Barclays showed plans to set up Singapore as its 2nd booking centre for Asia Pacific personal banking affairs, while Standard Chartered announced a development of its wealth management services in the city-state.
A separate record by Knight Frank discovered that prime quality workplace rents in the Raffles Place and Marina Bay precinct stayed unchanged from the previous quarter, at $11.36 psf each month in 1Q2025. At the same time, the CBD occupancy degree declined partially from 93.7% in the last quarter to 93.5% in 1Q2025, which Knight Frank attributes to the new completed Keppel South Central.
The anticipated growth in need are going to accompany a drop in brand-new office supply following the finalization of IOI Central Boulevard Towers and Keppel South Central. “Supply of new office is set to be constricted in between 2Q25 and 2027,” states Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia. This would certainly “assist modest but sustained growth in office leas during this period”, he adds.
Local office rental fees presented little modification in Q1 2025, based on information collected by JLL. The research reveals that CBD Grade An office spaces tracked by the consultancy documented a gross effective rent of $11.60 psf monthly for the very first quarter, outlining up just 0.5% q-o-q.
The marginal growth continues the subdued movement in office rentals 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 duration of modest variation in rents since we began tracking this data collection,” claims JLL in a March 26 press release.
“Although this relocation trend is not yet widespread, tenants are progressively taking into consideration cost-neutral options that include right-sizing and relocating to even more modern office centers in order to reduce price,” notes Yeo. Furthermore, occupiers might be incentivised to relocate as property managers supply subsidised fit-out costs or other benefits in a proposal to preserve tenancy levels.
Workplaces in some other locations islandwide presented q-o-q adjustments varying from -0.3% to 3.4%.
On The Other Hand, Knight Frank’s Yeo notes that apart from Shaw Tower, no significant additions to the marketplace are anticipated in the nearby term. This might position an obstacle for large-footprint occupiers, making relocations among such tenants unlikely in the brief to medium term.
He anticipates that most significant global firms with workplaces in Singapore will continue to be in a holding pattern up until higher clarity surfaces on the global landscape. However, flight-to-quality moves might happen among some companies upon lease expiry as they seek to right-size or reduce expenses. Knight Frank also anticipates prime office rental growth to range between -1% to 2% for the whole of 2025.
