Grade A office rents to stay stable in 2025 amidst strong leasing

Despite supply-side challenges, positive rent reversions remain likely in 2025.

Grade A office market rents in Singapore are expected to remain stable in 2025, despite healthy leasing activity across newly completed office developments.

According to Morgan Stanley Research, the IOI Central Boulevard Towers is nearing full occupancy, whilst Keppel South Central has secured Manulife as an anchor tenant.

It said the strong take-up of prime office spaces reflects sustained demand for high-quality workplaces in core central business districts (CBDs).

The decision to maintain stable rental forecasts stems from several key market dynamics. Firstly, CBRE data indicates that market rents remained flat throughout 2024, even as IOI Central Boulevard Towers experienced steady leasing activity.

Additionally, anchor tenants like Manulife often negotiate lower rental rates compared to smaller tenants.

Morgan Stanley said another notable market shift is the flight to quality, as companies are increasingly relocating from older CBD buildings to modern Grade A developments with better amenities and sustainability features.

Despite these supply-side challenges, positive rent reversions remain likely in 2025. New leases are anticipated to be signed at slightly higher rates than expiring ones, resulting in single-digit growth in reversion rates.