AI giants expand in CBD whilst corporates stay put to avoid relocation costs

No new CBD supply until 2027 as Raffles Place rents reach $11.69 psf pm.

Most Singapore office tenants renewed leases rather than moved in the second quarter of 2026, with relocation costs outweighing the case for expansion, even as artificial intelligence companies bucked the trend by actively taking up new space, according to Knight Frank's SG Office Update Q2 2026.

The report said occupiers found it easier to justify rental increases in line with inflation than to commit to the steeper step-ups that come with moving to larger premises, leaving most corporates with little urgency to change premises.

"The lack of justifiable relocation budgets has resulted in a corresponding lack of urgency amongst corporates to change premises," Tridiana Ong, Head, Occupier Strategy and Solutions, Knight Frank Singapore, said.

Rents of prime grade office space in the Raffles Place / Marina Bay area grew 1% quarter-on-quarter (QoQ) and 1.7% in the first half of the year to record an average of $11.69 psf pm in the second quarter of 2026, reflecting the sustained strong demand for quality office spaces in central locations. 

Occupancy levels in the Raffles Place / Marina Bay precinct were stable in Q2 2026, with a slight 0.3 percentage point (pp) dip to 96.7% from 97% in the previous quarter. The overall CBD occupancy was 95.3%, an increase of 0.6 pp QoQ. 

Meanwhile, a separate report by CBRE said that expanding companies may have to secure office space earlier or look beyond the central business district (CBD), as no major new completions are expected through 2027 and Grade A vacancy remains at a record low.

A CBRE report showed that the supply gap follows the delivery of Shaw Tower, the only major office project added to the market in 2026.

“For occupiers with requirements in the next two to three years, the window to secure quality space on favourable terms is narrowing,” said David McKellar, CBRE head of leasing for Singapore.

Some occupiers are already looking beyond the Core CBD, with Alexandra and Paya Lebar seeing active take-up from the public, consumer goods, professional services, and education sectors.

Against that backdrop of low churn, AI firms stood out as active movers. OpenAI is establishing its first overseas Applied AI Lab in Singapore, backed by more than $300m in investment and creating over 200 local roles, with plans to expand its local office footprint over time.

Databricks is quadrupling its space and plans to grow headcount by up to 50% upon moving into a new 32,000 sq ft premises at IOI Central Boulevard Towers later this year. Anthropic is reportedly planning a presence in the city-state, following OpenAI and Google DeepMind. AI hardware firm Plaud is investing $10m to establish Singapore as its Asia-Pacific headquarters and first regional research and development hub.

Knight Frank attributed the city-state's draw for AI occupiers to its talent pool, stable regulatory environment and government investment in the technology.

The firm cautioned, however, that AI expansion must be weighed against ongoing space reductions among established technology companies and financial institutions.

Looking ahead, Knight Frank projected CBD rents would rise by 3% to 5% in 2026, supported by tight supply and Singapore's continued appeal as a safe-haven business hub amidst global political tensions, trade disputes and open conflict.