CBD office rents continue subdued growth trajectory in 1Q2025
A different report by Knight Frank found that prime grade workplace rents in the Raffles Place and Marina Bay district stayed the same 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 recently finished Keppel South Central.
Tangye is optimistic about workplace need, keeping in mind that MNCs in Singapore are progressively taking on a full return-to-office model while the financial services market is recoiling. Last November, Barclays showed strategies to set up Singapore as its second reservation centre for Asia Pacific exclusive banking affairs, while Standard Chartered publicized a development of its wealth management services in the city-state.
The flight to quality is set to drive need for 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 demand will spill over to Keppel South Central and the upcoming advancement of Shaw Tower.
Calvin Yeo, head of occupier strategy and solutions at Knight Frank, claims that amid international unpredictability, lots of inhabitants are choosing to renew leases at existing properties. At the same time, others are beginning to search for top quality office as part of possible flight-to-quality moves.
Due for completion in 2026, the property development lately secured its initial lessee, co-working company The Great Room. The business introduced earlier this month that it will open a 36,000 sq ft workspace in the building next year.
Offices in other locations islandwide presented q-o-q modifications varying from -0.3% to 3.4%.
Found in Tanjong Pagar, Keppel South Central was finished in early February. During the time, Keppel revealed that close to 50% of the space had actually been devoted or was under negotiation. The structure has also secured its first support lessee, reportedly insurance firm Manulife.
Meanwhile, Knight Frank’s Yeo notes that besides Shaw Tower, no contributions to the marketplace are expected in the near term. This can present a challenge for large-footprint occupiers, making movings among such tenants unlikely in the brief to medium term.
He predicts that most significant global companies with workplaces in Singapore are going to stay in a holding pattern up until higher clearness arises on the global landscape. However, flight-to-quality actions may happen among some organizations upon lease expiry as they look for to right-size or decrease prices. Knight Frank also expects prime office rental development to range between -1% to 2% for the entire of 2025.
The forecasted development in demand will coincide with a drop in new workplace supply following the conclusion of IOI Central Blvd Towers and Keppel South Central. “Supply of brand-new office is readied to be constrained between 2Q25 and 2027,” says Chua Yang Liang, head of study and consultancy for JLL Southeast Asia. This would “assist moderate but sustained growth in office leas during this duration”, he adds.
The marginal growth continues the subdued trajectory in workplace rents 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 variant in rents since we started tracking this data collection,” claims JLL in a March 26 news release.
“Although this moving pattern is not yet prevalent, tenants are increasingly taking into consideration cost-neutral options that include right-sizing and moving to even more modern workplace centers in order to reduce price,” notes Yeo. In addition, inhabitants might be incentivised to relocate as landlords offer subsidised fit-out costs or other benefits in a proposal to preserve tenancy levels.
Local workplace leas showed little change in Q1 2025, based upon information compiled by JLL. The research discloses that CBD Quality A workplaces tracked by the consultancy recorded a gross efficient rent of $11.60 psf monthly for the very first quarter, edging up simply 0.5% q-o-q.
