CBD office rents continue subdued growth trajectory in 1Q2025
The marginal development continues the subdued movement in office rents over the last four quarters. CBD rental fees expanded 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,” says JLL in a March 26 press release.
The flight to quality is set to drive demand for new workplace. Andrew Tangye, head of workplace leasing and advisory at JLL Singapore, notes that IOI Central Boulevard Towers, finished last year, is nearing 80% dedication. As a result, he expects need will certainly spill over to Keppel South Central and the upcoming development of Shaw Tower.
Due for finalization in 2026, the property development recently protected its very first tenant, co-working company The Great Room. The firm announced earlier this month that it will open up a 36,000 sq ft office in the building following year.
The predicted development in need will accompany a drop in brand-new workplace source following the conclusion of IOI Central Boulevard Towers and Keppel South Central. “Supply of brand-new office space is set to be constricted between 2Q25 and 2027,” says Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia. This would certainly “sustain moderate but sustained growth in office rents during this period”, he includes.
“Although this transfer pattern is not yet widespread, occupiers are progressively thinking about cost-neutral options that include right-sizing and transferring to more modern office centers in order to reduce cost,” notes Yeo. On top of that, inhabitants might be incentivised to move as property managers supply subsidised fit-out costs or other benefits in a bid to preserve occupancy degrees.
Calvin Yeo, head of occupier strategy and solutions at Knight Frank, claims that amidst global unpredictability, several inhabitants are opting to renew leases at existing premises. At the same time, others are beginning to look for quality workplace as part of potential flight-to-quality moves.
Found in Tanjong Pagar, Keppel South Central was completed in early February. During the time, Keppel revealed that close to 50% of the space had actually been devoted or was under negotiation. The building has actually also safeguarded its first support lessee, reportedly insurance company Manulife.
Workplaces in some other areas islandwide showed q-o-q changes varying from -0.3% to 3.4%.
He anticipates that most significant global companies with workplaces in Singapore are going to remain in a holding pattern up until greater clarity emerges on the global landscape. Nevertheless, flight-to-quality moves might happen amongst some companies upon lease expiry as they seek to right-size or lower costs. Knight Frank also anticipates prime workplace rental growth to range between -1% to 2% for the entire of 2025.
A separate record by Knight Frank discovered that prime quality workplace rents in the Raffles Place and Marina Bay district stayed unchanged from the last quarter, at $11.36 psf per month in 1Q2025. At the same time, the CBD occupancy degree decreased partially from 93.7% in the last quarter to 93.5% in 1Q2025, which Knight Frank attributes to the newly finished Keppel South Central.
Tangye is optimistic about office space need, keeping in mind that MNCs in Singapore are gradually embracing a complete return-to-office model while the financial solutions sector is rebounding. Last November, Barclays disclosed plans to establish Singapore as its second booking centre for Asia Pacific exclusive banking operations, while Standard Chartered announced an expansion of its wealth management programs in the city-state.
On The Other Hand, Knight Frank’s Yeo notes that apart from Shaw Tower, no contributions to the market are anticipated in the nearby term. This could present an obstacle for large-footprint occupiers, making relocations among such tenants unlikely in the brief to medium term.
Local workplace rental fees presented little modification in Q1 2025, based on information collected by JLL. The research discloses that CBD Quality An offices tracked by the consultancy recorded a gross effective lease of $11.60 psf monthly for the first quarter, edging up just 0.5% q-o-q.
