CBD office rents continue subdued growth trajectory in 1Q2025
The marginal growth continues the subdued movement in office rents over the last four quarters. CBD rents increased 0.4%, 0% and 0.7% q-o-q in 4Q2024, 3Q2024 and 2Q2024. “This marks the lengthiest duration of modest variation in rents since we began tracking this information series,” claims JLL in a March 26 news release.
The trip 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 Boulevard Towers, finished in 2024, is nearing 80% dedication. As a result, he foresees demand will certainly spill over to Keppel South Central and the upcoming advancement of Shaw Tower.
Local workplace rents presented little modification in Q1 2025, based upon information collected by JLL. The research shows that CBD Grade A workplaces traced by the consultancy reported a gross efficient lease of $11.60 psf per month for the very first quarter, outlining up just 0.5% q-o-q.
On The Other Hand, Knight Frank’s Yeo notes that besides Shaw Tower, no contributions to the market are expected in the near term. This could present a challenge for large-footprint occupiers, making relocations amongst such renters unlikely in the brief to medium term.
Due for completion in 2026, the property development lately obtained its very first tenant, co-working company The Great Room. The business introduced earlier this month that it will open up a 36,000 sq ft work area in the property next year.
A different record by Knight Frank found that prime quality office rents in the Raffles Place and Marina Bay precinct remained unmodified from the previous quarter, at $11.36 psf each month in 1Q2025. At the same time, the CBD occupancy level declined partially from 93.7% in the last quarter to 93.5% in 1Q2025, which Knight Frank attributes to the recently finished Keppel South Central.
Located in Tanjong Pagar, Keppel South Central was completed in early February. At the time, Keppel announced that nearly 50% of the space had actually been committed or was under settlement. The structure has also secured its first anchor renter, reportedly insurance firm Manulife.
The forecasted development in demand will coincide with a decrease in new workplace supply following the finalization of IOI Central Blvd Towers and Keppel South Central. “Supply of brand-new office is set to be constrained between 2Q25 and 2027,” states Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia. This would certainly “uphold modest but sustained development in office rents during this period”, he includes.
He predicts that most major global corporations with offices in Singapore are going to continue to be in a holding pattern till greater clearness emerges on the international landscape. Nonetheless, flight-to-quality moves may occur among some organizations upon lease expiration as they seek to right-size or reduce expenses. Knight Frank also anticipates prime office rental growth to range in between -1% to 2% for the whole of 2025.
Workplaces in other areas islandwide presented q-o-q modifications varying from -0.3% to 3.4%.
“Although this moving pattern is not yet extensive, occupiers are increasingly thinking about cost-neutral options that include right-sizing and moving to more modern workplace facilities in order to reduce price,” notes Yeo. Additionally, occupiers may be incentivised to move as landlords provide subsidised fit-out costs or other advantages in a quote to keep occupancy levels.
Tangye is confident about office need, keeping in mind that MNCs in Singapore are gradually taking on a full return-to-office model while the financial solutions industry is recoiling. Last November, Barclays disclosed strategies to set up Singapore as its second booking centre for Asia Pacific exclusive financial operations, while Standard Chartered announced a growth of its wealth management services in the city-state.
Calvin Yeo, head of occupier strategy and services at Knight Frank, says that amid worldwide unpredictability, several inhabitants are deciding to restore rent at existing premises. At the same time, others are starting to search for top quality office spaces as part of potential flight-to-quality moves.
