CBD office rents continue subdued growth trajectory in 1Q2025
A separate report by Knight Frank discovered that prime quality office rents in the Raffles Place and Marina Bay precinct stayed the same from the last quarter, at $11.36 psf per 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 connects to the newly finished Keppel South Central.
He predicts that most significant global companies with workplaces in Singapore will stay in a holding pattern till higher clarity surfaces on the global landscape. Nevertheless, flight-to-quality moves may happen amongst some businesses upon lease expiration as they seek to right-size or reduce expenses. Knight Frank also expects prime workplace rental growth to range between -1% to 2% for the whole of 2025.
Offices in other areas islandwide showed q-o-q changes varying from -0.3% to 3.4%.
Located in Tanjong Pagar, Keppel South Central was finished in early February. During the time, Keppel introduced that close to 50% of the space had been committed or was under settlement. The building has actually also protected its initial anchor occupant, reportedly insurance company Manulife.
Calvin Yeo, head of occupier strategy and options at Knight Frank, states that amid global unpredictability, lots of occupiers are opting to renew leases at existing premises. At the same time, others are starting to search for top quality office as part of potential flight-to-quality actions.
On The Other Hand, Knight Frank’s Yeo notes that besides Shaw Tower, no contributions to the marketplace are expected in the near term. This could pose an obstacle for large-footprint occupiers, making movings among such tenants unlikely in the brief to medium term.
“Although this transfer pattern is not yet widespread, tenants are progressively thinking about cost-neutral options that consist of right-sizing and moving to more modern office facilities in order to reduce cost,” notes Yeo. In addition, inhabitants might be incentivised to relocate as landlords provide subsidised fit-out costs or other advantages in a bid to keep tenancy levels.
The flight to quality is set to drive demand for brand-new office space. Andrew Tangye, head of workplace leasing and advisory at JLL Singapore, notes that IOI Central Boulevard Towers, completed in 2024, is nearing 80% dedication. As a result, he anticipates need will certainly spill over to Keppel South Central and the anticipated advancement of Shaw Tower.
Tangye is hopeful about office space need, keeping in mind that MNCs in Singapore are gradually adopting a complete return-to-office model while the financial services sector is rebounding. Last November, Barclays showed plans to establish Singapore as its second reservation centre for Asia Pacific private banking affairs, while Standard Chartered publicized an expansion of its wealth management programs in the city-state.
Local office space leas presented little modification in Q1 2025, based on data collected by JLL. The research discloses that CBD Grade An office spaces traced by the consultancy documented a gross effective lease of $11.60 psf monthly for the very first quarter, outlining up simply 0.5% q-o-q.
The marginal development continues the controlled trajectory in workplace rentals over the last four quarters. CBD leas increased 0.4%, 0% and 0.7% q-o-q in 4Q2024, 3Q2024 and 2Q2024. “This marks the longest duration of modest variant in rents since we began tracking this data collection,” says JLL in a March 26 press release.
The anticipated development in demand are going to accompany a decrease in new office supply following the completion of IOI Central Boulevard Towers and Keppel South Central. “Supply of new office space is set to be constrained in between 2Q25 and 2027,” states Chua Yang Liang, head of research and consultancy for JLL Southeast Asia. This would “support moderate but sustained development in office rental fees throughout this duration”, he includes.
Due for finalization in 2026, the development lately protected its initial occupant, co-working provider The Great Room. The firm introduced earlier this month that it will certainly open up a 36,000 sq ft workspace in the building following year.
