Singapore office rents rise, vacancies ease in Q4 as supply tightens

[SINGAPORE] The latest official statistics show Singapore office rents firming and vacancies tightening in the fourth quarter, especially in the prime segment, which has been riding on the tailwinds of tight supply in the near term.

The Urban Redevelopment Authority’s (URA) rental index of office space in Singapore’s central region rose 0.4 per cent in Q4 2025 over the preceding quarter. This contrasts with the quarter-on-quarter dips of 0.1 per cent in the third quarter of 2025 and 0.3 per cent in the second quarter of 2025.

For the whole of 2025, the rental index rose 0.3 per cent after remaining unchanged in 2024.

URA’s data also showed that the islandwide vacancy rate of office space fell to 11.1 per cent as at the end of Q4 2025, from 11.2 per cent at end-Q3 2025 and 11.4 per cent as at end-Q2 2025.

Wong Xian Yang, head of research for Singapore and South-East Asia at Cushman & Wakefield, highlighted the wider divergence of vacancy rates for well-located, modern office stock vis-a-vis older offices.

URA’s vacancy rate for Category 1 offices – which cover better-quality office buildings in the city area – tightened for the third consecutive quarter to 9.3 per cent as at end-Q4. The rate was 9.9 per cent as at end-Q3 and 11 per cent as at end-Q2 2025.

On the other hand, for Category 2 offices – which cover the remaining office space in Singapore – the vacancy rate continued to rise to 11.9 per cent at end-Q4 from 11.7 per cent at the end of Q3. “This underscores persistent quality-driven leasing demand,” noted Wong.

Tricia Song, head of research for Singapore and South-east Asia at CBRE, said that the vacancy rate for the property consulting group’s Core Central Business District (CBD) Grade A office basket declined steadily over the year, falling from 5.9 per cent in the first quarter of 2025 to 4.5 per cent by the end of the year, reflecting sustained demand for prime office space.

“Notably, vacancy in the Marina Bay submarket declined steadily from a peak of 9.4 per cent in Q3 2024 to a low of 4.2 per cent in Q4 2025,” Song added.

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Vacated spaces absorbed

Dr Chua Yang Liang, JLL’s head of research and consultancy for South-east Asia, noted that by the second half of 2025, two key factors that had subdued the Singapore office market had largely diminished.

The first was high interest rates, which had restricted business expansion and companies’ ability to secure approval from their headquarters for new capital expenditure.

The second was the supply pressure that had emerged from new and secondary office spaces. IOI Central Boulevard Towers was completed in Q3 2024 with 1.26 million square feet (sq ft), and Keppel South Central followed in Q1 2025 with about 600,000 sq ft. “Concurrent consolidation and rightsizing activities over the last two years also created secondary spaces requiring backfilling,” added Dr Chua.

Secondary space is space vacated on the expiry of a lease by a tenant that is moving to another building, as well as space returned to a landlord when a tenant reduces its leased area upon a lease renewal.

As at end-2025, IOI Central Boulevard Towers was more than 95 per cent filled and Keppel South Central almost 35 per cent committed, said Dr Chua. “(Vacated) spaces at South Beach, Marina One and Capital Square were also absorbed by new tenants or existing occupiers expanding within their buildings.”

Catherine He, Colliers’ head of research for Singapore, said: “With no Grade A office completions in the core CBD until 2027, vacancy rates will stay tight, reinforcing upward pressure on rents.”

Market observers expect Newport Tower to be completed in 2027, and The Skywaters and Clifford Centre in 2028.

Most property consultancy groups predict that CBD Grade A office rents will appreciate at a faster clip in 2026 than in 2025.

Islandwide office net demand, as reflected by the change in occupied space, was nearly 97,000 sq ft in 2025, down from 118,400 sq ft in 2024, based on URA figures.

Price drop

URA’s price index of office space in the central region fell 0.7 per cent quarter on quarter in Q4 2025, an acceleration from the 0.2 per cent drop in the previous quarter.

For the whole of 2025, the price index slipped 2.1 per cent, contrasting with the 1.8 per cent increase in 2024.

“Colliers has observed that this price decline is due to strata transactions outside the core CBD, and contrasts with the price trend of prime Grade A core CBD office projects, which has seen renewed investor interest,” noted He.

Giving her take, Song of CBRE pointed out: “Looking forward, a lower domestic interest rate environment could lend support to investment demand over the near term as Singapore’s prime office assets are now offering positive carry, in addition to the positive rental outlook.”