Singapore CBD office vacancy falls to lowest level since 2022

The vacancy rate fell to 5.6% in Q2.

Singapore's CBD Grade A office market continued to tighten in the second quarter of 2026, with vacancy rates declining for the third consecutive quarter as demand for premium office space remained strong and availability of high-quality buildings stayed limited, according to Savills.

Data compiled by Savills showed that CBD Grade A office vacancy fell by 1.0 percentage point quarter-on-quarter to 5.6% in Q2 2026. The decline marked the lowest vacancy level since Q3 2022, when vacancy stood at 5.2%, and represented a 1.4 percentage point improvement compared with the same period a year earlier.

Savills said the improvement was driven primarily by stronger performance among higher-grade buildings, particularly Grade AAA offices. Vacancy in the Grade AAA segment declined for the sixth consecutive quarter, falling from 5.1% in Q1 2026 to 3.1% in Q2.

The consultancy said the reduction was largely due to lower vacancy in Marina Bay buildings, supported by demand from new entrants to Singapore as well as occupiers upgrading from serviced office arrangements. The 3.1% vacancy rate was the lowest since Q4 2013, when Grade AAA vacancy reached 2.8%.

Savills attributed the exceptionally tight conditions in the Grade AAA segment to sustained demand from industries such as artificial intelligence and fintech, combined with limited new supply of premium office developments.

Grade AA offices also recorded improving conditions, with vacancy declining by 0.7 percentage points quarter-on-quarter to 8.5%. This reversed the upward trend seen over the previous three quarters.

According to Savills, some occupiers have chosen to remain in existing premises or move into Grade AA buildings as an alternative to the increasingly constrained Grade AAA market. Higher rents, fit-out costs, reinstatement expenses and relocation costs have made Grade AA buildings an attractive balance between quality, location and affordability.

By comparison, Grade A office vacancy remained broadly stable at 5.8% during the quarter after rising by 1.0 percentage point in Q1. Savills said this segment appears to be entering a period of greater selectivity, with occupiers weighing the benefits of remaining in Singapore against rising occupancy costs.

Looking ahead, Savills expects the shortage of premium office space to create a wider ripple effect across the market. As Grade A CBD space becomes more expensive and scarce, some occupiers may consider relocating selected functions to lower-grade buildings or decentralised locations to manage costs.

The consultancy also noted that some multinational companies may pursue regional optimisation strategies by shifting certain back-office and support functions to lower-cost markets elsewhere in Asia.

Across Singapore's CBD submarkets, Marina Bay and Tanjong Pagar recorded further declines in vacancy. Marina Bay vacancy fell for the sixth consecutive quarter to 3.3%, the lowest since Q3 2022, while Tanjong Pagar vacancy declined for a second consecutive quarter to 19.3%.

Orchard Road vacancy remained stable at 1.3%, following a 0.5 percentage point decline in the previous quarter. Meanwhile, Shenton Way recorded the largest increase among submarkets, with vacancy rising from 5.5% to 6.3%, largely due to higher vacancy in Grade A buildings.

Savills said the divergence between premium and lower-quality office assets is expected to continue as occupiers become increasingly selective about space requirements, quality and cost efficiency.