Singapore CBD Grade A office rents to remain flat this year

New supply during the year is at a low of 553,000sq ft.

While Savills analysts had earlier anticipated that 2025 may be the year where some tenants may take bold decisions to restructure their business processes harnessing the use of artificial intelligence (AI), that expectation may be pushed back by some quarters to perhaps the end of the year.

“With new supply in 2025 at a low of just 553,000 sq ft, and IOI Central Boulevard expected to be fully let by mid-2025, CBD Grade A office rents may still be able to hold its ground despite voices expecting a negative impact on demand for office space from corporate restructuring, to accommodate the adoption of AI at the workplace,” the analyst said.

Here’s more from Savills:

With supply held in almost a ceteris paribus condition, landlords have a much easier time managing rents. The yearning of companies wanting a better building may see demand upgrades from lower than Grade A to Grade A buildings. This may help backfill any further shadow space or new vacancy in the premium class of office buildings.

Layoffs in 2024 have centred mainly on tech companies, many of them based in business parks. CBD Grade A office tenants have largely been left unscathed sans a few large companies laying off some staff . However, it may only be towards the end of the third to fourth quarter of 2025 that the roll out of AI services by technology companies is felt.

Under this scenario, we believe that CBD Grade A office rents may remain flat in 2025, after having risen 1.1% in 2024.