As the market dynamics shift, prime grade office rents in Singapore’s Raffles Place-Marina Bay area experienced a modest increase of 0.2% quarter-on-quarter in the second quarter of 2025, reaching an average of $11.38 per square foot per month. This slight upward movement reflects a market adjusting to the evolving needs of tenants and the competitive landscape of the central business district (CBD).
The overall rental growth for the first half of 2025 was also recorded at 0.2%, a significant decline compared to the 1.3% increase noted during the same timeframe the previous year.
The tightening vacancy rates in the core CBD Grade A office segment played a pivotal role in influencing rental trends. The vacancy rate decreased from 5.9% in the first quarter to 5.3% in the second quarter of 2025, indicating a growing demand for prime office spaces. This decline suggests that companies are actively seeking to secure quality office environments, leading to heightened leasing activity.
The concept of “flight to quality” has emerged as a prominent theme, where businesses prioritize premium locations and facilities to attract and retain talent, especially in a post-pandemic environment.
The anticipated tightening of supply in large contiguous office spaces further exacerbates the upward pressure on rents. With no significant completions forecasted until 2028, the scarcity of sizable office spaces is expected to drive competition among tenants. Companies are increasingly aware of the need for modern and well-equipped workspaces, which consequently leads to a preference for more premium offerings.
This trend, coupled with the falling vacancy rates, creates a conducive environment for landlords to exercise greater control over pricing.
Despite the modest growth observed in the first half of 2025, forecasts for the second half of the year suggest that rental growth may remain flat. Projections indicate that annual growth could oscillate between -1% and 2%, reflecting a cautious outlook in the face of economic uncertainties and shifting tenant preferences.
While the current dynamics indicate a tightening market, the overall economic context and ongoing adjustments in corporate strategies will play a significant role in shaping future rental trends.
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News Source: Edgeprop
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