Singapore Grade A office rents to rise by 2% in 2026

Limited supply and margin pressures to reshape CBD office demand.

The Singapore office market is likely to become increasingly polarised over the next two years, as rising rents, limited new supply and divergent corporate balance sheets reshape occupier behaviour, according to Savills’ latest outlook.

Savills noted that much of the discussion in 2025 focused on how generative artificial intelligence (GenAI) could begin to materially disrupt workplaces in 2026, including concerns that companies may reduce headcount as automation accelerates. While these risks are valid in broad terms, Savills cautioned that actual AI adoption in non-software-based industries is likely to be slower and less extensive than many forecasts suggest.

The firm added that claims of widespread retrenchments driven directly by AI implementation may, in some cases, reflect “AI-washing” rather than structural shifts in labour demand.

Margin pressure, not AI, to weigh on occupier demand

While slower-than-expected AI adoption may appear reassuring for office occupiers, Savills highlighted that other countervailing forces are likely to limit labour demand in 2026. Both technology and non-technology firms are expected to remain focused on margin improvement amid ongoing economic and geopolitical pressures.

Savills cited a JPMorgan report published on 1 August 2025, “Differentiating large from small: Firm size and exposure to trade tensions”, which found that smaller US companies tend to operate with significantly lower profit margins, higher leverage and far less balance sheet flexibility than large-cap firms. These structural disadvantages weaken their pricing power, constrain their ability to absorb fixed costs and limit their capacity to manage tariffs, supply-chain shifts and regulatory complexity.

Savills also noted that much of the superior profitability within the S&P 500 appears to be concentrated among a relatively small group of very large firms. This growing divergence was highlighted by BlackRock CEO Larry Fink at the 2026 World Economic Forum in Davos, where he cautioned that AI and recent macroeconomic trends are concentrating wealth among a limited cohort of companies and individuals, while smaller firms risk being left behind.

Implications for Singapore’s office market

According to Savills, these macro trends are already filtering through to Singapore’s CBD office market. One clear signal is the widening rental outperformance of premium assets.

In 2025, Grade AAA CBD office rents rose by 2.5% year-on-year, outpacing Grade AA and Grade A rental growth of 1.8% and 1.6% respectively. While a similar pattern was evident in 2024, Savills noted that the divergence has become more pronounced. Data from the Urban Redevelopment Authority (URA) also shows that rents for both Category 1 and Category 2 office space have continued to rise.

With limited new Grade A office supply expected in 2026 and 2027, Savills believes smaller multinational companies are likely to feel the impact of rising rents more acutely than their larger counterparts. These firms are also more exposed to margin pressures arising from tariffs and operational costs, which may prompt them to scale down their footprints in both Grade A and non-Grade A space or expand into regional cities instead.

Larger multinationals, by contrast, are better positioned to absorb higher rents. Savills noted that well-capitalised firms and family offices are likely to remain active in Grade A CBD buildings, particularly in the AAA sub-grade. Frontier start-ups, meanwhile, may continue to establish lean operations anchored around co-working spaces within Grade A offices.

However, Savills cautioned that stronger financial capacity does not necessarily translate into expansion. Many large companies are still rightsizing after aggressive hiring between late-2020 and early-2022, and some may choose to consolidate operations into fewer, higher-quality buildings rather than increase total floor space.

Polarisation to define the next phase of the market

Looking ahead, Savills expects Grade A CBD office rents to rise across the board in 2026 and 2027, but with growing segmentation within the market.

Grade A space is likely to be increasingly dominated by large, financially strong corporates and family offices, while non-Grade A buildings may face rising vacancy levels as their tenant base skews towards smaller companies operating under greater margin pressure. Over time, Savills said this could result in more redevelopment activity among ageing or less competitive office stock.

For 2026, Savills’ forecast for Grade A CBD office rents remains at +2%, supported by constrained supply, resilient demand for quality space and ongoing consolidation into premium buildings.