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Singapore’s office market saw an overall decline in rents in the second quarter of 2025, according to the latest statistics from URA. This follows a marginal quarterly gain of 0.3% in the first three months of the year.
On a yearly basis, office rents contracted 1.4%, marking the first annual decline since 3Q2021. Knight Frank Singapore’s head of research, Leonard Tay, notes that this reflects a trend of rent stabilisation in the first half of the year, with most occupiers opting to renew leases rather than expand or relocate to avoid high office fit out costs.
The Downtown Core and Orchard Road Planning area saw a decline in office rents of 3.2% q-o-q to $11.68 psf/pm in 2Q2025, down from $12.07 psf/pm in the first quarter. This was attributed to a slight improvement in vacancy rates, mainly due to high take-up rates at IOI Central Boulevard Towers, which is currently 85% leased.
Meanwhile, office rents outside Downtown Core and Orchard Road saw their third consecutive quarterly increase, with median rents rising 2.7% q-o-q in 2Q2025 following a 1% q-o-q increase in the previous quarter. CBRE’s head of research Southeast Asia, Tricia Song, says this reflects the cautious sentiment among tenants and landlords amid ongoing macroeconomic uncertainty. Cost-efficient buildings are becoming increasingly popular among tenants, she adds.
Core Grade A office rents increased by 1.3% in the first half of the year, defying concerns that global economic headwinds would dampen rental gains, according to CBRE. They project rents to increase by 2-3% in 2025. Most landlords are focusing on maintaining high occupancy rates in light of the global uncertainties, resulting in tight occupancy levels and stable rents, says Tay.
Islandwide office occupancy improved slightly in 2Q2025 to 88.6%, compared to 88.3% in 1Q2025. However, this is lower than the 89.2% recorded in 2Q2024.
To support occupancy rates, landlords are offering smaller spaces and incentives to bridge gaps in rental expectations, says Colliers’ head of research, Catharine He. “Such strategies have proven to be effective in driving momentum for take-up in new developments such as IOI Central Boulevard, which is almost fully occupied,” she adds.
While large corporations are unlikely to make significant relocation plans in the near future, small- and medium-sized companies may make flight-to-quality moves to take advantage of the current rental environment, according to Tay. Corporate real estate managers are moving away from static space strategies, instead focusing on flexible work arrangements that are better able to support business disruptions without affecting operations, he says.
He anticipates that businesses will delay making leasing decisions until there is more certainty surrounding the US-China trade war and monetary policies in key economies.
Looking ahead, He expects the supply of new office space to be relatively stable until 2028, when 3.08 million sq ft is projected to enter the market. Vacancy rates are expected to tighten over the next two years, creating a favourable investment environment amid falling interest rates.
She also notes that the recent extension of the CBD incentive scheme and strategic development incentive scheme could lead to some office supply leaving the market and being redeveloped into mixed-use projects.