Singapore's office rental market continues to evolve as we move into 2025. Tight supply, resilient demand, and a growing emphasis on sustainability are shaping this highly competitive environment. Businesses must adopt strategic leasing approaches to stay ahead in securing prime spaces amidst rising costs and limited availability.

1. Tight Market Conditions and Marginal Rent Growth

The office leasing market remains characterised by low vacancy rates and stable rents. Companies are renewing leases to avoid high relocation costs, with landlords leveraging strong demand to maintain or increase rents.

In Q4/2024, Grade A CBD office rents rose 0.6% quarter-on-quarter, with spaces in Marina Bay averaging S$12.83 psf per month.

Limited supply continues to bolster rental growth. The fourth quarter last year saw rents in prime locations such as Raffles Place and City Hall inching up to S$10.12 and S$10.24 psf per month, respectively. This trend underscores the importance of early lease negotiations for businesses seeking premium office spaces.

Market dynamics have also highlighted the growing value of centrality and quality in office space. As businesses prioritise locations that align with their corporate image, landlords in prime areas continue to enjoy pricing power, further solidifying the appeal of Grade A office spaces.

2. New Supply: Navigating Opportunities and Pressures

The addition of high-quality developments, such as the IOI Central Boulevard Towers with 1.26 million square feet of net lettable area, presents opportunities for tenants. While new supply might exert downward pressure on rents, robust demand for modern and sustainable buildings is likely to mitigate this. Businesses considering relocation must weigh the advantages of upgraded facilities against associated fit-out and reinstatement costs.

High-profile developments like these not only introduce cutting-edge facilities but also redefine tenant expectations. Features such as integrated technology, energy-efficient systems and smart building solutions are becoming industry benchmarks. These enhancements are

particularly appealing as they not only support agility and innovation but also align with evolving ESG priorities.

3. Transition to Higher Quality Spaces

Modern, premium office spaces are increasingly favoured for their alignment with workforce needs and operational goals. Key drivers include:

● Employee well-being: Ergonomic designs, natural lighting, and advanced air filtration systems enhance workplace satisfaction and productivity.

● Prestigious locations: Proximity to the central business district boosts brand image and accessibility.

● Technological advancements: Advanced digital infrastructure supports seamless hybrid work models – features that are highly attractive to future-focused companies.

These trends underscore the shift in tenant preferences toward spaces that go beyond functionality, offering experiences that align with modern business values.

4. Sustainability as a Competitive Edge

Sustainability has become a priority for tenants and landlords alike. Nine out of ten Grade A offices in Singapore now hold green certifications such as LEED (Leadership in Energy and Environmental Design) or BREEAM (Building Research Establishment Environmental Assessment Method). These certifications not only align with corporate responsibility goals but also attract environmentally conscious tenants and investors.

Moreover, the integration of sustainable technologies will drive operational efficiency. Features such as renewable energy systems and energy-efficient HVAC systems reduce utility costs and carbon footprints, offering long-term value for both landlords and tenants. As ESG considerations grow in importance, properties that embrace sustainability will likely see increased demand, reinforcing their market resilience.

The Outlook for 2025

Singapore’s office market is poised to remain dynamic in the following months. The interplay between tight supply, new developments, and evolving tenant expectations will continue to shape the landscape. Businesses that stay agile and prioritise strategic leasing decisions will be best positioned to thrive.

Conclusion: Proactive Leasing Strategies for Success

Navigating Singapore’s competitive office rental market requires proactive strategies and informed decision-making. Whether it’s securing space in a new development or renewing leases in prime locations, aligning office strategies with business goals will be critical for success.

Contact our Commercial Leasing team for expert guidance tailored to your business needs.