Islandwide office vacancy falls to 10.8% as at end-Q1: URA

[SINGAPORE] The islandwide vacancy rate of office space shrank to 10.8 per cent as at the end of the first quarter of 2026, from 11.1 per cent at the close of the previous three-month period.

The latest figure is also down from the 11.7 per cent as at end-Q1 2025.

The tighter vacancy rate released by the Urban Redevelopment Authority (URA) on Friday (Apr 24) came even as the rental index for office space in Singapore’s central region fell 0.2 per cent over the preceding quarter. This contrasts with the 0.4 per cent quarter-on-quarter gain in the index in the fourth quarter of 2025.

Leonard Tay, research head at Knight Frank Singapore, said: “Against the tight occupancy… the slight dip in the office rental index suggests that certain older buildings could be coming under increasing rental pressure, especially when existing tenants are presented with more modern and well-equipped options.”

URA indicated that the amount of occupied office space islandwide increased by 279,861 square feet (sq ft) of net lettable area (NLA) in Q1, after remaining unchanged in the previous quarter.

CBRE head of research for Singapore and South-east Asia Tricia Song noted that data from the property consulting group corroborated this trend.

It showed that net absorption for Core Central Business District (CBD) Grade A space “was robust at 0.2 million sq ft in Q1 2026”, she noted, “as occupiers continued to prioritise prime, well-located and ESG-compliant premises during relocations, with some securing additional space for future headcount growth”.

URA said that the islandwide stock of office space rose by 86,111 sq ft of NLA in Q1, compared with the drop of 75,347 sq ft in the previous quarter.

Wong Xian Yang, Cushman & Wakefield research head for Singapore and South-east Asia, said: “Central region office rents are expected to continue trending upward, supported by the resilience of the CBD Grade A segment.”

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Islandwide office vacancy falls to 10.8% as at end-Q1: URA

He explained: “While geopolitical risks and inflation uncertainty may dampen occupier confidence in the near term and result in some decision paralysis, underlying demand for high-quality space remains firm.”

The gross effective average monthly rental value for Cushman & Wakefield’s CBD Grade A basket rose 1.4 per cent quarter on quarter to S$11.36 per square foot in Q1 2026.

The group forecasts the full-year increase to be in the 4 to 7 per cent range – outpacing the gains of 2.4 per cent in 2025 and 1.7 per cent in 2024 – underpinned by limited new completions in 2026 and 2027.

“A potential increase in development cost amid elevated energy prices is expected to support current rental levels even as leasing demand moderates,” Wong added.

Islandwide, as at end-Q1, there was a total supply of about 9.3 million sq ft gross floor area of office space in the pipeline – the same as in the previous quarter – based on URA data.

The government agency’s price index for offices in the central region rose 0.2 per cent quarter on quarter in Q1, against a drop of 0.7 per cent in the previous quarter.

Catherine He, Colliers head of research for Singapore, said: “Central region office prices might rebound in 2026, due to strong liquidity, low borrowing costs and strong investor demand in office assets.”