CBD office rents continue subdued growth trajectory in 1Q2025
The marginal growth continues the controlled trajectory in workplace rentals over the last four quarters. CBD rents 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 series,” claims JLL in a March 26 news release.
The trip to quality is set to drive need for brand-new office space. Andrew Tangye, head of workplace leasing and advisory at JLL Singapore, notes that IOI Central Blvd Towers, finished last year, is nearing 80% commitment. As a result, he anticipates demand will certainly spill over to Keppel South Central and the forthcoming development of Shaw Tower.
Local office space leas presented little change in Q1 2025, based upon information collected by JLL. The research shows that CBD Grade A workplaces traced by the consultancy recorded a gross efficient lease of $11.60 psf per month for the first quarter, edging up simply 0.5% q-o-q.
Situated in Tanjong Pagar, Keppel South Central was completed in early February. During the time, Keppel announced that close to 50% of the space had been dedicated or was under settlement. The building has actually also protected its very first anchor tenant, reportedly insurance company Manulife.
He predicts that most major global corporations with offices in Singapore will stay in a holding pattern until higher clearness surfaces on the worldwide landscape. Nonetheless, flight-to-quality actions might take place among some services upon lease expiry 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 entire of 2025.
The predicted growth in need will accompany a decrease in brand-new office space source following the conclusion of IOI Central Boulevard Towers and Keppel South Central. “Supply of new workplace is set to be constricted in between 2Q25 and 2027,” says Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia. This would “sustain modest but sustained development in office leas throughout this duration”, he adds.
Calvin Yeo, head of occupier strategy and services at Knight Frank, claims that amidst worldwide unpredictability, many occupiers are deciding to restore leases at existing premises. At the same time, others are beginning to search for quality office as part of prospective flight-to-quality actions.
Workplaces in some other locations islandwide showed q-o-q changes ranging from -0.3% to 3.4%.
On The Other Hand, Knight Frank’s Yeo notes that besides Shaw Tower, no contributions to the marketplace are anticipated in the nearby term. This could posture a difficulty for large-footprint occupiers, making relocations amongst such renters unlikely in the short to medium term.
“Although this moving pattern is not yet widespread, occupiers are increasingly thinking about cost-neutral options that consist of right-sizing and transferring to more modern workplace centers in order to reduce expense,” notes Yeo. Additionally, inhabitants may be incentivised to move as property owners provide subsidised fit-out costs or other advantages in a bid to preserve tenancy levels.
Tangye is positive about office need, keeping in mind that MNCs in Singapore are progressively taking on a complete return-to-office model while the financial services sector is rebounding. Last November, Barclays showed strategies to establish Singapore as its second reservation centre for Asia Pacific private banking affairs, while Standard Chartered publicized a development of its wealth management services in the city-state.
Due for finalization in 2026, the property development lately obtained its very first tenant, co-working company The Great Room. The business revealed earlier this month that it will open a 36,000 sq ft work space in the property next year.
A different report by Knight Frank found that prime quality office rents in the Raffles Place and Marina Bay district stayed unchanged from the previous quarter, at $11.36 psf per month in 1Q2025. At the same time, the CBD occupancy degree 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.
