CBD office rents continue subdued growth trajectory in 1Q2025
Situated in Tanjong Pagar, Keppel South Central was finished in very early February. During the time, Keppel revealed that almost 50% of the space had been dedicated or was under settlement. The building has also protected its very first anchor renter, reportedly insurance company Manulife.
He predicts that most significant global corporations with offices in Singapore are going to stay in a holding pattern up until greater clarity arises on the international landscape. However, flight-to-quality actions may take place among some companies upon lease expiry as they look for to right-size or lower expenses. Knight Frank also anticipates prime office rental development to range in between -1% to 2% for the whole of 2025.
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 previous quarter, at $11.36 psf monthly 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.
Calvin Yeo, head of occupier strategy and options at Knight Frank, claims that amid international uncertainty, many inhabitants are opting to renew leases at existing properties. At the same time, others are beginning to look for top quality workplace as part of potential flight-to-quality actions.
The predicted growth in demand will coincide with a decrease in brand-new office space source following the finalization of IOI Central Blvd Towers and Keppel South Central. “Supply of brand-new office is readied to be constrained between 2Q25 and 2027,” says Chua Yang Liang, head of study and consultancy for JLL Southeast Asia. This would certainly “uphold moderate but sustained development in office rental fees throughout this duration”, he includes.
Tangye is positive about office space need, noting that MNCs in Singapore are gradually taking on a complete return-to-office model while the financial solutions sector is rebounding. Last November, Barclays disclosed strategies to develop Singapore as its 2nd booking centre for Asia Pacific private banking affairs, while Standard Chartered announced a growth of its wealth management services in the city-state.
Local office space rental fees presented little change in Q1 2025, based on data compiled by JLL. The research discloses that CBD Grade A workplaces tracked by the consultancy documented a gross efficient rent of $11.60 psf monthly for the first quarter, edging up simply 0.5% q-o-q.
Due for finalization in 2026, the property development recently secured its initial occupant, co-working company The Great Room. The company announced earlier this month that it will certainly open a 36,000 sq ft workspace in the building next year.
The marginal growth continues the controlled trajectory in workplace rents over the last four quarters. CBD rental fees 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 started tracking this data collection,” states JLL in a March 26 news release.
Offices in some other locations islandwide showed q-o-q changes varying from -0.3% to 3.4%.
The flight to quality is set to drive need for new workplace. Andrew Tangye, head of workplace leasing and advisory at JLL Singapore, notes that IOI Central Blvd Towers, completed in 2024, is nearing 80% dedication. As a result, he foresees demand will certainly spill over to Keppel South Central and the anticipated growth of Shaw Tower.
“Although this relocation trend is not yet extensive, occupiers are increasingly considering cost-neutral options that include right-sizing and transferring to even more modern workplace centers in order to reduce price,” notes Yeo. On top of that, inhabitants might be incentivised to relocate as property managers supply subsidised fit-out costs or other benefits in a bid to preserve occupancy levels.
Meanwhile, Knight Frank’s Yeo notes that other than Shaw Tower, no significant additions to the market are anticipated in the near term. This might posture a challenge for large-footprint inhabitants, making movings among such tenants unlikely in the brief to medium term.
