Singapore CBD’s Q4 Grade A office vacancy rate hits record highs since 2018

The vacancy rate rose to 8% in Q4.

From data compiled by Savills, the vacancy rate of CBD Grade A offices rose 1.8 ppts QoQ to 8.0%, the highest since Q1/2018 when it reached 8.8% with the inclusion of Marina One West Tower to the stock.

“In the last quarter of 2024, the jump in vacancy was attributed to the addition of IOI Central Boulevard Towers (with NLA of nearly 1.26 million sq ft) to the office stock. Vacancy rates would have remained unchanged if IOI Central Boulevard Towers was excluded, signalling a relatively stable leasing market in the quarter,” the report said.

Here’s more from Savills:

Compared against the same period a year ago, vacancy rate of overall CBD Grade A offices rose 1.5 ppts, a reversal from the three consecutive quarters of YoY declines. Vacancy rates of Grades AAA and AA increased 4.8 ppts and 0.2 ppts QoQ to 9.4% and 6.9% respectively in the quarter.

For Grade AA offices, this was the fourth consecutive quarter of increase. On the other hand, vacancy rate of Grade A offices contracted 1.4 ppts QoQ to 6.0% in Q4/2024 after two consecutive quarters of increase. On a YoY basis, vacancy rate of both Grades AA and AAA offices grew 1.8 ppts and 2.6 ppts respectively, while that of Grade A offices contracted 1.4 ppts.

Despite the surge in overall CBD Grade A offices in 2024, net demand remained positive for the third consecutive year, albeit at a moderated pace, at 285,000 sq ft for the whole of 2024. This was lower than the 622,000 sq ft in 2022 and 444,000 sq ft in 2023.

By location, except for Raffles Place, City Hall and Orchard Road, where the vacancy rates declined QoQ, the other submarkets recorded quarterly increases in vacancy rates in the quarter. The vacancy rate in Orchard Road declined 0.7 of a ppt to 1.5% while that at Raffl es Place fell 0.4 of a ppt to 8.1%. For the City Hall area, it was the second consecutive quarter of decrease.

Among the submarkets that recorded quarterly increases, the largest growth was from Marina Bay, rising 7.6 ppts to 12.0%, which was attributed to the addition of the newly completed IOI Central Boulevard Towers. Vacancy rates in the other submarkets rose between 0.7 of a ppt and 0.9 of a ppt in Q4/2024. This was the second consecutive quarter of increase for Beach Road/Middle Road, and was led by increases in vacancy rates in Duo Tower and Gateway West.

On a YoY basis, the growth in vacancy rates of four submarkets was outweighed by the decline in vacancy rates of the remaining three submarkets, leading to overall higher vacancy rates of CBD Grade A offices compared to Q4/2024. Increases in vacancy rates ranged from 0.1 of a ppt to 7.1 ppts, with the largest coming from Marina Bay.

On the other hand, YoY declines in vacancy rates were between 0.6 of a ppt and 3.6 ppts, and the largest decrease was from City Hall. This was due to the relatively high occupancy of Guoco Midtown since its addition into the office stock in Q1/2023.