Appetite for premium space drives CBD office rents: CBRE

Grade A office rents rose by 0.8% in Q1 2025, reaching $12.05 per square foot per month.

A growing appetite for premium office space is driving up rents in Singapore’s Core Central Business District (CBD), even as decentralisation trends continue to shape the broader market.

After a year of stagnation, Grade A office rents rose by 0.8% in Q1 2025, reaching $12.05 per square foot per month, according to real estate consultancy CBRE.

Despite the rent growth, vacancy rates inched up to 5.3% from 4.9% in the previous quarter. This was mainly due to large occupiers like Meta at Marina One and Morgan Stanley at Capital Square opting not to renew certain leases, collectively contributing around 170,000 square feet of newly available space.

Still, CBRE emphasised that prime buildings continue to enjoy low vacancy levels.

From the supply side, landlords have been buoyed by the strong leasing performance at IOI Central Boulevard Towers, which reached over 80% occupancy.

With no new prime CBD completions expected until Clifford Centre’s redevelopment in 2028, the tight supply may continue to support rental growth.

In the broader market, two notable completions were delivered in Q1: Keppel South Central in the fringe CBD and Paya Lebar Green in a decentralised location.

Keppel secured Manulife as its anchor tenant, whilst flexible office providers such as Smartworks and The Great Room are also expanding their footprint—The Great Room is slated to open a 36,000 square foot space in Shaw Towers in 2026.

Meanwhile, investment activity slowed, with office transactions falling 80.8% to $159.3m in Q1. The largest transaction was the $91.8m sale of the top three floors at 20 Collyer Quay.

However, CBRE noted that this represents a recovery from the Q1 2024 low of $69.7m, which marked a 15-year trough.

Falling interest rates in Singapore could help revive investor appetite. The 3M compounded SORA has dropped by 50 basis points to 2.56% since the start of the year, aided by ample liquidity.

Michael Tay, CBRE’s Deputy Managing Director, noted that if the US Federal Reserve accelerates rate cuts, Singapore could benefit from renewed investor confidence in the office sector.

CBRE forecasts 2–3% growth in Core CBD (Grade A) rents for 2025, compared to just 0.4% in 2024, driven by tight supply and resilient demand. However, global uncertainties—including trade conflicts and tariffs—remain potential headwinds.