The Crossroads: Renovate or Relocate?

As companies enter the next leasing cycle, many occupiers in Singapore are reassessing whether their existing offices are still fit for purpose. When leases approach expiry—or when workspaces begin to feel operationally constrained—the decision is rarely cosmetic.

Retrofitting offers continuity and familiarity, while relocation can unlock better building quality, improved efficiency, and long-term flexibility. In a market defined by firm rents, elevated fit-out costs, and limited supply of high-quality space, this choice has become a strategic one. 

The question is no longer simply how much space to take, but how that space supports cost discipline, talent outcomes, and long-term business direction. 

Market Context: Tight Supply, High Capex, Changing Priorities

Singapore’s office market in 2025 remains exceptionally tight. CBD Grade A office rents¹ have risen for the sixth consecutive quarter to reach S$9.93 per square foot (psf), while top-tier Grade AAA spaces led the growth, climbing to S$13.19 psf, a level not seen since 2015.  This upward pressure is driven by a distinct "flight-to-quality" amid a supply crunch, with projections indicating limited new stock until the end of 2027. 

At the same time, office fit-out costs have risen materially. Depending on specification, a basic fit-out might range from S$100–S$150, and high-end or premium fit‑outs might range up to S$125–S$200 psf. These numbers reflect higher material, labour, and mechanical costs, and materially affect total occupancy decisions.

Against this backdrop, occupiers are increasingly weighing whether capital should be deployed into upgrading existing space—or preserved by relocating into fitted, higher-performing buildings.

Option A: The Case for Retrofitting

Staying in your current office and renovating has several advantages. First, it minimises business disruption: no need to move servers, re-cable networks, shuffle seating or retrain staff on new logistics. Continuity can mean avoiding downtime and productivity losses.

Also, if your address is strategic (e.g. near clients, transport, or in a desirable neighbourhood), maintaining it might be more valuable than chasing a new location. And if your current lease is below-market, the cost-benefit of renovation may work out.

However, the true cost of retrofitting² often extends beyond construction budgets.  Renovations can introduce operational disruption, management distraction, and temporary productivity loss—particularly where decanting or phased works are required.

More importantly, even a high-quality retrofit may struggle to keep pace with evolving workplace expectations around sustainability, wellness, and flexibility. For older or energy-inefficient buildings, capital investment risks delivering short-term improvement without materially enhancing long-term competitiveness.

Option B: The Case for Relocation

Relocation decisions today are typically driven by three considerations: space efficiency, capital efficiency, and long-term strategic alignment. Here’s why many firms in Singapore are opting to lease new office space instead of renovating:

Right‑Sizing 

Hybrid work has stabilised as an operating reality rather than a temporary response, especially with the Tripartite Guidelines on Flexible Work Arrangements¹ in full effect (as of Dec 2024). Occupiers are increasingly right-sizing footprints using agile seating ratios, allowing them to reduce net lettable area while upgrading into higher-quality buildings without proportionately higher occupancy costs. 

Fitted / Plug‑and‑Play Units 

Fully fitted or plug-and-play units have become an important release valve in a high-capex environment. By avoiding upfront fit-out expenditure, tenants can preserve capital and accelerate occupation timelines while still accessing Grade-A space. 

Better Amenities, ESG & Brand Alignment

Modern Grade‑A office buildings in Singapore come with enhanced amenities, efficient air‑conditioning, improved indoor environment quality, wellness features, better building services, perhaps even green certification. These can enhance employee satisfaction, support corporate sustainability goals, and help attract and retain talent, which are increasingly critical factors in a tight labour market.

Incentives & Flexible Terms

Because landlords know high fit‑out costs are a barrier, many are willing to negotiate, offering rent‑free periods, fit-out subsidies, or other concessions to secure tenants. This flexibility can offset moving or reinstatement costs. Indeed, given tight supply and increasing competition for quality tenants, incentive packages are becoming a central part of lease negotiation in 2025.

Long-Term Strategic Advantage

Relocation also allows organisations to realign their real estate with longer-term objectives—whether that is ESG performance, brand positioning, workforce experience, or scalability. For many occupiers, this reset is less about moving address and more about future-proofing operations. 

A well-negotiated lease in a modern building—particularly one offering fitted space or landlord contributions—can often deliver lower effective occupancy costs over a typical 3–5 year term than reinvesting heavily into an ageing office.

A Strategic Reset, Not Just a Property Decision

As occupiers plan for the next phase of their leasing strategy, the retrofit-versus-relocate decision is increasingly shaped by forward visibility rather than sunk costs. While retrofitting can still make sense in specific circumstances, many firms are finding that relocation—particularly into fitted, high-quality space—offers greater flexibility, capital efficiency, and alignment with long-term business goals. 

The most successful occupiers treat office decisions as part of a broader operational strategy. Starting discussions early, evaluating total occupancy cost, and stress-testing options against future growth and workforce needs are now essential steps—not optional ones. 

In a market where quality space remains scarce, early and informed decisions are often the difference between securing strategic advantage and reacting under pressure. 

Planning your next lease cycle?

A structured review of your current space, lease timeline, and market options can help clarify whether retrofitting or relocating makes strategic sense. A confidential discussion with Savills’ Commercial Leasing team can provide an objective view of what’s achievable in today’s market.

Sources:

1. https://www.savills.com.sg/landing-pages/q3-2025-office-leasing-report.aspx

2. https://pdf.savills.asia/fit-out-guide/savills-projects-office-fitout-v5-2.pdf

3. https://www.mom.gov.sg/employment-practices/good-work-practices/flexible-work-arrangements