Savills Singapore Research notes that office rents in Singapore’s CBD held steady in Q2/2025, supported by low vacancy rates and a limited supply of new office space. While headline figures appear stable, the market reveals a more nuanced story – with submarket dynamics shifting and the City Hall submarket emerging as a standout performer.

In Q2, City Hall posted the strongest rental growth among all CBD micro-markets, rising 1.1% quarter-on-quarter (QoQ) – the highest increase since Q2/2023. It also recorded the lowest vacancy rate at just 2.2%, its tightest since Q2/2019. This marked a reversal from the first quarter this year, when the vacancy rate in City Hall ticked upward. The submarket’s strong showing reflects sustained demand for centrally located high-specification office space.

“We’re seeing a game of musical chairs play out among occupiers. Tenants are moving but not necessarily expanding,” explains Alan Cheong, Executive Director of Research and Consultancy, Savills Singapore. “Amid an uncertain business environment, firms are consolidating space and prioritising quality over size.”

Across the CBD, Grade A office rents rose 0.3% QoQ for the fifth consecutive quarter – a slight moderation from the 0.4% increase in Q1. Leasing demand remains active but cautious, with most occupiers consolidating or relocating rather than expanding. Correspondingly, the CBD Grade A office vacancy rate declined 0.7 percentage points (ppts) QoQ to 7%, led by improved take-up in selected buildings, particularly within the Grade A and AA segments.

Micro-market performance varied widely across the CBD:

• Marina Bay’s vacancy rate rose to 11.1%, up from 4.6% a year ago, due to the absorption of space from newly completed developments such as IOI Central Boulevard Towers.
• Vacancy rate in Tanjong Pagar climbed to 11.2%, while Orchard Road remained tight at 1.6% for the sixth consecutive quarter.

TABLE 1: Micro-Market Grade A Office Rents And Vacancy Rates, Q2/2025

Savills Research notes that recent US tariffs have introduced an added layer of caution among businesses, especially those in trade-exposed industries. This has impacted leasing decisions, with many firms opting to renew existing leases or downsize, rather than expand or commit to new space. However, the medium-term outlook remains optimistic, supported by supply-side constraints.

“The abruptness of the Liberation Day tariffs has added a psychological drag on corporate space planning,” adds Cheong. “But once this shock is digested and tariff rates stabilise, we expect leasing momentum to gradually return. With below-average new office completions for the next few years, we forecast CBD Grade A office rents to resume a more meaningful growth of 2% per annum in 2026 and 2027.”

Ashley Swan, Executive Director of Commercial & Industrial, Savills Singapore comments,“We have definitely seen an uptick in activity in the last quarter with more occupiers assessing the options available to them and potentially seeking an upgrade in quality. However, with continued uncertainty in the business environment and no rapid expansion, most occupiers tend to err on the side of caution and only decide to move if there is a strong business case to do so or they are able to reduce real estate cost. This, combined with a lack of supply, leads us to believe that the office market will remain fairly resilient with rents likely to rise slowly and steadily over the next few quarters.”

Looking ahead, the redevelopment of Shaw Tower will be the next major addition to the CBD, offering over 400,000 sq ft of new office space. This is significantly smaller than the 1.26 million sq ft introduced by IOI Central Boulevard Towers and remains well below the 10-year average for new completions.

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