CBD office rents continue subdued growth trajectory in 1Q2025
Local office rental fees presented little change in Q1 2025, based upon information collected by JLL. The research discloses that CBD Quality An offices traced by the consultancy documented a gross efficient lease of $11.60 psf monthly for the first quarter, edging up simply 0.5% q-o-q.
He anticipates that most significant global companies with offices in Singapore will continue to be in a holding pattern up until better clearness surfaces on the worldwide landscape. However, flight-to-quality actions might take place amongst some businesses upon lease expiration as they seek to right-size or minimize prices. Knight Frank also expects prime workplace rental growth to range in between -1% to 2% for the whole of 2025.
The marginal growth continues the subdued movement in workplace rentals over the last four quarters. CBD rental fees grew 0.4%, 0% and 0.7% q-o-q in 4Q2024, 3Q2024 and 2Q2024. “This marks the lengthiest period of modest variation in rents since we started tracking this information series,” states JLL in a March 26 news release.
The trip 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 Blvd Towers, finished in 2024, is nearing 80% dedication. As a result, he foresees demand will spill over to Keppel South Central and the upcoming advancement of Shaw Tower.
“Although this moving pattern is not yet prevalent, tenants are progressively considering cost-neutral options that consist of right-sizing and moving to more modern office facilities in order to minimise expense,” notes Yeo. Furthermore, inhabitants may be incentivised to move as property owners supply subsidised fit-out costs or other advantages in a bid to keep tenancy levels.
Calvin Yeo, head of occupier strategy and solutions at Knight Frank, says that amid global unpredictability, several inhabitants are choosing to renew rent at existing premises. At the same time, others are beginning to look for top quality workplace as part of possible flight-to-quality relocations.
Situated in Tanjong Pagar, Keppel South Central was finished in early February. At the time, Keppel introduced that close to 50% of the space had actually been dedicated or was under arrangement. The structure has actually also secured its first anchor lessee, reportedly insurance firm Manulife.
Tangye is positive about office demand, keeping in mind that MNCs in Singapore are progressively embracing a full return-to-office model while the financial solutions field is rebounding. Last November, Barclays revealed plans to set up Singapore as its 2nd booking centre for Asia Pacific personal financial operations, while Standard Chartered publicized a development of its wealth management services in the city-state.
A different report by Knight Frank spotted that prime grade office rents in the Raffles Place and Marina Bay precinct stayed 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 recently finished Keppel South Central.
The anticipated development in demand will coincide with a drop in new office space supply following the finalization of IOI Central Boulevard Towers and Keppel South Central. “Supply of brand-new office is set to be constrained between 2Q25 and 2027,” says Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia. This would “uphold moderate but sustained growth in office leas throughout this duration”, he adds.
Workplaces in other areas islandwide presented q-o-q adjustments ranging from -0.3% to 3.4%.
Meanwhile, Knight Frank’s Yeo notes that other than Shaw Tower, no contributions to the market are anticipated in the near term. This can posture a challenge for large-footprint inhabitants, making movings among such tenants unlikely in the short to medium term.
Due for finalization in 2026, the property development lately secured its very first lessee, co-working company The Great Room. The firm revealed earlier this month that it will open a 36,000 sq ft work space in the building next year.
