CBD office rents continue subdued growth trajectory in 1Q2025
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 been devoted or was under settlement. The building has actually also secured its first anchor renter, reportedly insurance firm Manulife.
Offices in other locations islandwide showed q-o-q changes varying from -0.3% to 3.4%.
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 Boulevard Towers, finished last year, is nearing 80% commitment. As a result, he foresees demand will certainly spill over to Keppel South Central and the upcoming growth of Shaw Tower.
The marginal growth continues the controlled trajectory in office rentals over the last four quarters. CBD leas expanded 0.4%, 0% and 0.7% q-o-q in 4Q2024, 3Q2024 and 2Q2024. “This marks the lengthiest period of modest variant in rents since we started tracking this data series,” says JLL in a March 26 news release.
A separate report by Knight Frank discovered that prime quality office rents in the Raffles Place and Marina Bay precinct stayed unmodified 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 connects to the newly finished Keppel South Central.
On The Other Hand, Knight Frank’s Yeo notes that apart from Shaw Tower, no contributions to the marketplace are anticipated in the nearby term. This might posture an obstacle for large-footprint occupiers, making movings amongst such renters unlikely in the short to medium term.
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Tangye is confident about office need, keeping in mind that MNCs in Singapore are gradually taking on a full return-to-office model while the financial solutions sector is rebounding. Last November, Barclays showed plans to establish Singapore as its second booking centre for Asia Pacific personal financial affairs, while Standard Chartered announced a development of its wealth management services in the city-state.
Calvin Yeo, head of occupier strategy and services at Knight Frank, states that amidst worldwide unpredictability, several occupiers are deciding to restore leases at existing premises. At the same time, others are beginning to search for high quality workplace as part of potential flight-to-quality steps.
Local workplace rents presented little change in Q1 2025, based on data collected by JLL. The research shows that CBD Grade An office spaces traced by the consultancy documented a gross effective lease of $11.60 psf monthly for the first quarter, outlining up just 0.5% q-o-q.
The forecasted development in demand are going to coincide with a drop in brand-new office supply following the conclusion of IOI Central Boulevard Towers and Keppel South Central. “Supply of brand-new office space is readied to be constricted between 2Q25 and 2027,” says Chua Yang Liang, head of research study and consultancy for JLL Southeast Asia. This would certainly “assist moderate but sustained development in office rental fees during this duration”, he includes.
He forecasts that most significant global companies with workplaces in Singapore will stay in a holding pattern up until greater clearness surfaces on the international landscape. However, flight-to-quality moves might happen amongst some businesses upon lease expiry as they look for to right-size or reduce expenses. Knight Frank also anticipates prime workplace rental development to range between -1% to 2% for the entire of 2025.
“Although this moving fad is not yet widespread, occupiers are progressively taking into consideration cost-neutral options that consist of right-sizing and relocating to more modern office facilities in order to minimise price,” notes Yeo. In addition, occupiers might be incentivised to relocate as property owners provide subsidised fit-out costs or other advantages in a bid to preserve tenancy levels.
Due for finalization in 2026, the development lately secured its very first lessee, co-working company The Great Room. The firm announced earlier this month that it will open a 36,000 sq ft workspace in the establishment following year.
