Office Rents Climb Higher in Q2 as Limited CBD Supply Keeps Market Tight

Rents for core CBD Grade A office spaces rose 0.8% quarter on quarter to S$12.50 per sq ft per month in Q2, marking the sixth consecutive quarter of growth, according to CBRE data. In the first half of 2026, rents have risen 1.6%.

In JLL’s basket, gross effective rents for CBD Grade A offices increased 1.1% on quarter to S$12.19 psf per month in Q2, accelerating from 0.5% growth in Q1. Savills’ flash estimates showed rents for its basket of CBD Grade A office buildings rose about 0.5% in Q2, with much of the increase “concentrated in the Grade-AAA buildings.”

According to Knight Frank’s data, rents of prime grade office space in the Raffles Place and Marina Bay precinct grew 1% on quarter and 1.7% in the first half of 2026 to average S$11.69 psf per month. Occupancy levels in the precinct dipped slightly to 96.7% in Q2 from 97% in the previous quarter. Overall CBD vacancy edged up from 6.3% to 6.7% following Shaw Tower’s completion.

JLL said in its Q2 report that “the underlying market dynamic remains firmly supply-constrained, with Marina Bay remaining the primary demand driver as IOI Central Boulevard Towers and other prime buildings near full occupancy.” Tricia Song, CBRE Singapore and South-east Asia head of research, said the absence of new completions through 2027 means that the structural undersupply “is not a short-term phenomenon.”

Shaw Tower is the only major Grade A completion in 2026, with global insurer Allianz, payments technology firm Adyen and pharmaceutical company Sanofi-Aventis as its anchor and corporate tenants. Newport Tower will be the sole non-strata development due for completion in 2027, with the next meaningful wave of supply from The Skywaters, The Clifford, One Commerce Centre and Union Square Central expected only in 2028.

However, excluding new supply, vacancy fell to 5.6%, the lowest in nine quarters, as sustained occupier demand absorbed quality space faster than landlords could deliver it, said JLL.

Tenants across sectors from AI and fintech to professional services and insurance are increasingly committing to premium, well-located spaces ahead of need. JLL country CEO of Singapore and South-east Asia Michael Glancy pointed to Shell’s pre-commitment of about 100,000 sq ft at Asia Square Tower 1 and Databrick’s expansion at IOI Central Boulevard Towers as notable examples.

CBRE Singapore head of leasing David McKellar observed that AI firms previously occupying co-working environments are moving into permanent office space, signalling “their commitment to Singapore for the medium to long term, and with that comes a desire for operational certainty, brand presence, and the ability to customise their space.”

Alan Cheong, executive director of research and consultancy at Savills Singapore, said tenants are mostly rightsizing either within the same building or relocating and taking up smaller spaces. However, he noted that “tenants still prefer CBD locations over decentralised ones. Unless the rents are significantly lower for the latter, which it isn’t for now, they are continuing to coalesce within the CBD.”

Knight Frank noted ByteDance’s take-up of three floors at Mapletree Business City as an example of the flight to decentralised locations, after the company weighed cost-effective alternatives against the need to accommodate growth. With up to 145,000 sq ft of secondary space coming up at The Metropolis in Buona Vista by mid-2027 as Shell vacates the premises, “it remains to be seen whether other firms being squeezed in the CBD would join the decentralisation bandwagon, turning this into a trend.”

Analysts expect rents to rise by between 3% and 5% year on year, supported by a limited pipeline of new Grade A office supply. JLL South-east Asia head of research and advisory Chua Yang Liang said Singapore’s safe-haven advantage “is becoming increasingly tangible in the current environment,” with the Economic Strategy Review’s recommendations reinforcing “the structural case for continued office demand growth.”