Grade A Office Vacancy Falls to 5.9% as AI Firms Expand: Singapore Offices Split Into Two Tiers
A common view is that artificial intelligence will shrink headcounts and with them the need for office space. In a commentary for The Business Times, JLL’s Singapore chief executive Michael Glancy argues the data points the other way. Demand for the best Grade A space in the Central Business District is rising, while older offices without modern building systems are losing tenants and pricing power.
CBD Grade A Net Absorption, 9M 2026
Grade A Vacancy, Q3 2026
Yearly Rental Growth
Asia-Pacific Investment, H1 2026
What the Numbers Show
Net absorption of CBD Grade A offices reached about 500,000 sq ft in the first three quarters of 2026, up from roughly 400,000 sq ft a year earlier. Vacancy stood at 5.9 per cent in the third quarter and is expected to tighten towards 5 per cent by the end of 2027, with rents growing at around 4 per cent a year.
Capital is following. Commercial real estate investment in the Asia-Pacific reached US$92.5 billion in the first half of 2026, 35 per cent more than a year earlier, with offices taking the largest share. AI companies themselves are also taking more space in Singapore: about 500,000 sq ft in 2026, up from about 300,000 sq ft in 2025.
Why Better Buildings Win
JLL’s research found that 61 per cent of Singapore organisations expect AI to enhance human roles rather than replace them. As routine work is automated, the office becomes the place for judgement, negotiation and client work. Occupiers are choosing accordingly: 62 per cent put building quality and amenities ahead of a prime address, and 70 per cent prefer long leases over short-term flexibility.
| Survey Finding | Singapore | Asia-Pacific |
|---|---|---|
| Rental increases are the biggest occupancy cost pressure | 42% | 28% |
| Employee productivity is the top measure of real estate value | 46% | 43% |
| Organisational silos are the main constraint | Over one third | 12 points lower |
Source: JLL, as reported in The Business Times.
The Gap Between Plans and Action
Four in five Singapore organisations say their office portfolio needs to change because of AI, but only 11 per cent are actively optimising and 28 per cent have formal programmes to redesign space. The author expects that demand to turn into leasing decisions over the next two to three years, as major commercial redevelopments complete in 2028. Deloitte’s move to Orchard Central, an older retail building with upper floors converted to offices, is cited as an example of tenants choosing modern function over location.
Frequently Asked Questions
Is AI reducing demand for offices in Singapore?
Not so far. CBD Grade A net absorption rose to about 500,000 sq ft in the first nine months of 2026.
What is the current Grade A office vacancy rate?
About 5.9 per cent in the third quarter of 2026, expected to tighten towards 5 per cent by the end of 2027.
Which offices are losing out?
Older buildings in prime locations that lack modern building systems and amenities.
When will new office supply arrive?
Several major commercial redevelopments are due to complete in 2028.
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