Rents increased by 0.4% QoQ.
Data compiled by Savills Research showed that the vacancy rate of CBD Grade A offices in all micro-markets recorded declines in vacancy rates, except for City Hall and Orchard Road. Tanjong Pagar saw the largest contraction in the first quarter, falling to 9.7% in Q1/2025 from 10.3% in Q4/2024.
City Hall saw vacancy rates rising 0.3 of a percentage point (ppt) to 3.9%, while there was no change at 1.5% for Orchard Road. The vacancy rates in Raffles Place, Marina Bay, Shenton Way and Beach Road/Middle Road recorded declines of between 0.3 of a ppt to 0.5 of a ppt in the quarter.
Here’s more from Savills:
With healthy occupancy levels of CBD Grade A office buildings, rents have remained firm. Average monthly rents of overall CBD Grade A offices in Savills basket rose for the fourth consecutive quarter by 0.4% quarter-on-quarter (QoQ) to $9.83 psf in Q1/2025. This was slightly lower compared to 0.6% last quarter.
While the growth momentum has slowed down for Grades A and AA buildings in the quarter, rents of Grade AAA buildings rose by a larger 1.1% QoQ to S$13.05 psf, against 0.7% in Q4/2024. This was the largest QoQ increase since Q2/2023 when rents rose by a similar magnitude.
Rents of Grade AAA buildings has been on the rise for four consecutive quarters, evident from the high occupancies of such buildings and the quick pace in which previously vacated spaces are being filled up. These factors have motivated landlords to maintain or even increase their asking rents.
On a year-on-year (YoY) basis, rents of Grade AAA office buildings saw the largest growth, with a surge of 2.7%, the highest YoY increase in a quarter since Q3/2023. Similarly, rents of Grade AA and A buildings rose 1.7% and 0.9% YoY respectively in the quarter.
On a quarterly basis, rents in CBD Grade A offices in Beach Road/Middle Road, Orchard Road and Shenton Way remained unchanged in Q1/2025. For Orchard Road, this was the fifth consecutive quarter that rents have remained constant. The remaining micro-markets registered QoQ growth between 0.3% and 1.4%, with the largest growth of 1.4% QoQ increase in Marina Bay, the highest since Q4/2019. This could be attributed to most of the Grade AAA buildings being in Marina Bay, where the tight occupancies have brought about the strong growth to the micro-market.
Ashley Swan, the Executive Director for Commercial & Industrial at Savills Singapore, remarks, “Following higher leasing activities at the start of the year, the market now faces growing uncertainties due to recent tariff announcements. Businesses in this region keep reassessing their operational needs and spatial requirements as they adapt their strategies amid shifting economic conditions, which will certainly have implications for future demand.”
Similar to the prior year, rental rates and occupancy levels have remained relatively steady due to limited supply offsetting reduced demand. We anticipate this pattern will persist for the time being since the underlying factors driving the market haven’t changed and the effects of worldwide uncertainties will unfold gradually across several upcoming quarters.”
Alan Cheong, Executive Director of Research & Consultancy at Savills Singapore, comments, “In our earlier reports, we highlighted how limited new supply has played a crucial role in maintaining rent increases. Now, entering Q2, the focus shifts to whether office rents will stay robust amid the economic uncertainties caused by US tariff issues. Our view remains optimistic.”
Given the evolving global trade environment, tenants might opt to wait through the next two quarters and take a cautious stance toward expanding their leased spaces, relocating, or renewing leases. Considering the uncertainties surrounding ongoing tariff discussions, we continue to project stable Grade A Central Business District office rental rates throughout 2025. Despite these projections, many high-end AAA-rated properties with minimal vacancies could potentially achieve a modest 2% year-over-year rent growth.”
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