Savills Research has revised its office rental forecast for 2026 upward from 2% to a range of 3%–5% year-on-year (YoY) growth, supported by tight supply conditions and sustained occupancy levels.

Average CBD Grade A office rents rose for the eighth consecutive quarter, increasing 0.6% quarter-on-quarter (QoQ) to S$10.02 per sq ft in Q1/2026 — the highest level since Q4/2019 in the pre-pandemic period.

Strong take up of premium space, coupled with a persistent lack of available vacancies, has driven robust and consistent quarterly rental growth in the Grade AAA segment. However, with rents approaching cyclical highs, growth momentum in this segment has begun to moderate. In Q1/2026, Grade AAA office rents rose 0.4% QoQ to S$13.28 per sq ft, higher than the 0.2% growth in Q4/2025 but easing from the 1.0% increase recorded in Q3/2025.

Vacancy levels also remained tight across the CBD office market. The vacancy rate for CBD Grade A offices dipped by 0.1 percentage point (ppt) QoQ to 6.6% in Q1/2026, marking the second consecutive quarter of decline and the lowest level since Q3/2024.

Across the various office sub grades, only Grade AAA buildings recorded a further tightening in vacancies, extending their decline for the fifth consecutive quarter. Vacancy in this segment fell by 1.2 ppts QoQ to 5.1% in Q1/2026 — the lowest since Q3/2024, when it reached 4.5%.

In contrast, vacancy rates for Grade AA and Grade A offices rose during the quarter, although vacancy in the Grade AA segment has remained relatively stable as many tenants have opted to renew leases rather than relocate to higher-quality buildings.

While demand for quality office space remains stable, tenant mobility has become increasingly constrained by rising reinstatement and fit-out costs, prompting many occupiers to renew leases rather than relocate.

Shorter lease renewal terms — particularly among technology firms — have also become more prevalent, reflecting a cautious approach by companies navigating economic uncertainty and evolving workplace strategies.

Despite a moderation in large-scale transactions, private-sector office assets continue to demonstrate resilience, supported by stable income streams and improving investor sentiment amid a lower interest-rate environment.

Ashley Swan, Executive Director, Commercial & Industrial, Savills Singapore said: “2026 has continued where we left off at the tail end of 2025 with increased leasing activity and the tightening of available supply even through the festive season. This was reflected most in premium grade buildings as rents continue their upward trajectory in Q1. Having said that, we have not yet felt the true effects of the war and the accompanying economic uncertainties as well as rising cost it will inevitably bring. This is likely to be played out in the coming quarters.”

Commenting on the market outlook, Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore, said: “With limited new supply and persistently low vacancy levels, landlords are well positioned to maintain pricing power, and tight market conditions are expected to continue underpinning rental growth. Against this backdrop, we have revised our rental forecast for 2026 upward to a range of 3% to 5% growth. While geopolitical uncertainties and rising energy costs could introduce volatility, structural supply constraints are likely to remain the dominant driver of rental performance in the near term.”

TABLE 1: Micro-Market Grade A Office Rents And Vacancy Rates, Q1/2026