CBD office rents continue subdued growth trajectory in 1Q2025
A separate report by Knight Frank spotted that prime grade office rents in the Raffles Place and Marina Bay precinct remained the same from the last quarter, at $11.36 psf monthly in 1Q2025. At the same time, the CBD occupancy level decreased partially from 93.7% in the last quarter to 93.5% in 1Q2025, which Knight Frank attributes to the new completed Keppel South Central.
Located in Tanjong Pagar, Keppel South Central was finished in early February. During the time, Keppel introduced that almost 50% of the space had been dedicated or was under negotiation. The building has also safeguarded its very first support tenant, reportedly insurance company Manulife.
On The Other Hand, Knight Frank’s Yeo notes that in addition to Shaw Tower, no significant additions to the marketplace are expected in the nearby term. This could present a difficulty for large-footprint occupiers, making relocations among such renters unlikely in the short to medium term.
The marginal growth continues the controlled trajectory in office rentals over the last four quarters. CBD rental fees 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 started tracking this information series,” states JLL in a March 26 press release.
Tangye is hopeful about workplace need, keeping in mind that MNCs in Singapore are gradually taking on a full return-to-office model while the financial services sector is recoiling. Last November, Barclays disclosed strategies to set up Singapore as its second booking centre for Asia Pacific personal banking affairs, while Standard Chartered declared an expansion of its wealth management services in the city-state.
He anticipates that most significant global companies with workplaces in Singapore will remain in a holding pattern up until greater clearness arises on the global landscape. However, flight-to-quality moves may take place 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 some other areas islandwide showed q-o-q adjustments ranging from -0.3% to 3.4%.
The trip 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 last year, is nearing 80% dedication. As a result, he expects need will spill over to Keppel South Central and the anticipated growth of Shaw Tower.
The predicted development in need 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 space is set to be constrained between 2Q25 and 2027,” says Chua Yang Liang, head of research and consultancy for JLL Southeast Asia. This would certainly “support modest but sustained development in office rental fees during this duration”, he includes.
“Although this relocation trend is not yet prevalent, tenants are significantly thinking about cost-neutral options that include right-sizing and relocating to even more modern office centers in order to reduce cost,” notes Yeo. On top of that, inhabitants may be incentivised to move as landlords supply subsidised fit-out costs or other advantages in a bid to keep occupancy levels.
Local workplace leas presented little adjustment in Q1 2025, based on information compiled by JLL. The research reveals that CBD Quality A workplaces traced by the consultancy reported a gross effective rent of $11.60 psf per month for the very first quarter, edging up just 0.5% q-o-q.
Calvin Yeo, head of occupier strategy and options at Knight Frank, states that amidst global unpredictability, several occupiers are deciding to restore rent at existing properties. At the same time, others are starting to search for high quality office spaces as part of potential flight-to-quality moves.
Due for finalization in 2026, the property development lately protected its first lessee, co-working provider The Great Room. The company introduced earlier this month that it will certainly open a 36,000 sq ft office in the property following year.
