[SINGAPORE] Rents for Central Business District Grade-A office space in Singapore rose in the third quarter of 2025, supported by limited new supply and strong demand for premium buildings.
In Q3, rents grew 1.3 per cent to S$11.83 per square foot (psf) per month, JLL Research data showed on Monday (Sep 29), marking the strongest quarterly growth in six quarters.
The increase followed a 0.6 per cent growth in both Q1 and Q2 2025. Rents had grown 0.4 per cent in Q4 2024, after remaining flat in Q3 2024, JLL data indicated.
“This acceleration was primarily attributed to IOI Central Boulevard Towers being added to the rental basket after completing its one-year seasoning period,” the report noted. Excluding this addition, CBD office rents would have maintained modest growth of under 1 per cent for the sixth consecutive quarter.
Based on Knight Frank’s basket of rents, prime office rents in the Raffles Place and Marina Bay precinct grew 0.3 per cent quarter on quarter to an average of S$11.41 psf per month in Q3, following a 0.2 per cent increase in Q2.
Chua Yang Liang, JLL’s head of research and consultancy for South-east Asia, said: “Singapore’s office market has been holding up well, in part supported by stronger-than-anticipated economic fundamentals and a more conducive interest-rate environment.”
He added that growth is underpinned by easing global trade tensions and robust demand for technology and digital finance services.
Still, Knight Frank noted in a report on Monday that market activity remained cautious, with many occupiers preferring to renew leases rather than expand or relocate, particularly amid wider economic uncertainty.
Overall CBD occupancy rose slightly to 94.2 per cent in Q3, from 93.7 per cent in Q2, Knight Frank’s report showed.
While tenant movement remained limited, Knight Frank observed a “quiet trend of flight-to-quality cost-neutral moves with rightsizing involved, or measured expansion, especially when leases are due to expire”.
Enhanced tenant experiences in quality buildings, such as concierge services, food and beverages offerings, smart building operations and flexible co-working spaces, are drawing occupiers and supporting occupancy.
JLL’s head of office leasing and advisory Andrew Tangye said demand continues to be led by various sectors, including non-banking financial services and professional services firms.
For example, technology company Zoom Communications moved from a co-working space at Asia Square Tower 2 to IOI Central Boulevard Towers. Quantitative trading firm Jane Street is also planning to move into the same building.
Calvin Yeo, Knight Frank’s head of occupier strategy and solutions, said: “With limited fresh supply in the pipeline, most occupiers continue to prioritise renewals. However, selective upgrades to quality space have created a two-tier market where newer, well-connected buildings thrive and older stock faces growing pressure.”
Analysts expect rental growth and occupancy in the CBD office market to remain shaped by supply constraints and broader economic conditions.
JLL’s Chua said: “Constantly evolving trade conditions coupled with widening geopolitical uncertainties mean that companies continue to face higher compliance costs, compressed margins and delayed investments, factors that could undermine the business case for relocating to higher-quality office space in the near term.”
Nevertheless, office rents are expected to accelerate in 2026, supported by a tightening supply pipeline and as firms adapt to operating in an uncertain environment.
Tangye said that with IOI Central Boulevard Towers nearly full, leasing activity is now focused on Keppel South Central and Shaw Tower.
He said: “As vacancy rates are projected to tighten between 2025 and 2027, whole-floor and multi-floor opportunities will become increasingly limited, potentially driving rental rates beyond some tenants’ budget parameters.”
JLL anticipates rental growth to remain modest for the rest of 2025, with full-year growth expected to reach around 3 per cent.
Knight Frank projects that new supply in the CBD will remain limited until 2028, when nearly 3.2 million square feet is expected to come online, including the redevelopments of Clifford Centre, Singtel Comcentre, and The Skywaters’ office component.
With occupier movement largely driven by flight-to-quality from older buildings, the office market is likely to remain two-tiered, with high demand for newer properties and pressure on older stock to modernise or redevelop, it added.
Knight Frank expects the current cautious market sentiment to persist over the next six to 12 months, keeping prime rental growth largely flat in Q4 2025 with some marginal growth.
Business Times
