CBD office rents continue subdued growth trajectory in 1Q2025
The marginal development continues the controlled trajectory in workplace 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 variant in rents since we began tracking this data collection,” claims JLL in a March 26 news release.
Local workplace rents showed little modification in Q1 2025, based on information compiled by JLL. The research shows that CBD Grade An office spaces tracked by the consultancy reported a gross effective rent of $11.60 psf monthly for the first quarter, outlining up just 0.5% q-o-q.
The trip to quality is set to drive demand for brand-new workplace. Andrew Tangye, head of workplace leasing and advisory at JLL Singapore, notes that IOI Central Boulevard Towers, completed last year, is nearing 80% commitment. As a result, he expects demand will certainly spill over to Keppel South Central and the forthcoming advancement of Shaw Tower.
Tangye is optimistic about office space need, noting that MNCs in Singapore are gradually taking on a full return-to-office model while the financial services field is rebounding. Last November, Barclays disclosed strategies to develop Singapore as its 2nd booking centre for Asia Pacific personal banking affairs, while Standard Chartered publicized a growth of its wealth management services in the city-state.
“Although this transfer pattern is not yet prevalent, tenants are significantly thinking about cost-neutral options that consist of right-sizing and transferring to more modern workplace facilities in order to reduce cost,” notes Yeo. In addition, inhabitants may be incentivised to relocate as proprietors supply subsidised fit-out costs or other benefits in a proposal to preserve occupancy degrees.
Meanwhile, Knight Frank’s Yeo notes that in addition to Shaw Tower, no contributions to the market are anticipated in the nearby term. This could pose a challenge for large-footprint inhabitants, making movings amongst such renters unlikely in the brief to medium term.
Offices in some other areas islandwide presented q-o-q adjustments varying from -0.3% to 3.4%.
Located in Tanjong Pagar, Keppel South Central was finished in very early February. During the time, Keppel introduced that nearly 50% of the space had been committed or was under settlement. The building has also safeguarded its very first anchor tenant, reportedly insurance company Manulife.
Due for finish in 2026, the property development recently obtained its very first lessee, co-working provider The Great Room. The company announced earlier this month that it will open a 36,000 sq ft work area in the building following year.
Calvin Yeo, head of occupier strategy and solutions at Knight Frank, states that amidst worldwide unpredictability, numerous inhabitants are deciding to restore leases at existing premises. At the same time, others are beginning to look for high quality office as part of possible flight-to-quality actions.
The predicted development in demand are going to coincide with a decrease in new office source following the conclusion of IOI Central Boulevard Towers and Keppel South Central. “Supply of brand-new office space is readied to be constricted in between 2Q25 and 2027,” states Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia. This would certainly “assist modest but sustained growth in office leas during this period”, he adds.
He predicts that most major global firms with offices in Singapore will continue to be in a holding pattern till better quality arises on the international landscape. Nevertheless, flight-to-quality actions may occur among some businesses upon lease expiry as they seek to right-size or minimize prices. Knight Frank also anticipates prime workplace rental growth to range in between -1% to 2% for the whole of 2025.
A separate report by Knight Frank found that prime quality workplace rents in the Raffles Place and Marina Bay precinct stayed unchanged from the last quarter, at $11.36 psf each month in 1Q2025. At the same time, the CBD occupancy level decreased marginally from 93.7% in the last quarter to 93.5% in 1Q2025, which Knight Frank connects to the new completed Keppel South Central.
