Global companies rent unbuilt offices just to stay in Singapore

No major Grade A CBD supply until 2028 forces tenants to lease space 18 months early.

Singapore's Grade A central business district (CBD) office rents are expected to keep rising through 2027 as little additional office space enters the market before 2028, property consultants said.

“There's a lack of new Grade A CBD office buildings that can reduce the rental pressure in the market,” Alan Cheong, executive director of research and consultancy at Savills, said in an emailed reply to questions. He noted that most premium Grade A offices are almost fully occupied, pushing rents higher.

He expects 455,000 square feet (sq. ft.) of office space to be completed in 2026 before supply drops to just 180,000 sq. ft. in 2027. He said completions are expected to rebound to 1.9 million sq. ft. in 2028, assuming projects are delivered on schedule.

Christine Sun, chief researcher and strategist at Realion (OrangeTee & ETC) Group, said that after Shaw Towers is completed in the second quarter, no major Grade A office project will be completed in the CBD until 2028.

The two firms expect rents to keep rising this year, although by different amounts. Sun forecasts Grade A CBD rents will increase 3% to 4% by year-end, with vacancy remaining below 5%. Cheong expects rents to rise 5% to 7% from end-2025 levels.

Ashley Swan, executive director of commercial and industrial at Savills Singapore, attributed the acceleration in quarterly rental growth to a severe shortage of premium office space, with more tenants renewing leases instead of relocating and leaving space available.

The shortage is also changing how vacancy is measured. Cheong said Savills counts newly completed buildings only after six months to avoid including space that has already been leased but not yet occupied.

“In today's market, it may take up to a year after completion for the building to be substantially filled,” he said, adding that this could temporarily lift reported vacancy rates even when demand remains strong.

Sun said tenants are adapting by signing leases up to 18 months before upcoming buildings are completed, moving into slightly older or smaller offices within the CBD or relocating to city-fringe areas to reduce costs.

Cheong said rents for older CBD buildings are also rising because of the shortage of premium space, although they continue to record higher vacancy than Grade A offices.

Sun said financial institutions, professional service firms, and artificial intelligence-related businesses continue to underpin demand, with multinational corporations continuing to favour premium office space.

“The biggest risk to the tightening trend lies outside the property market itself,” Cheong said. He noted that companies facing higher costs could reduce their Singapore footprint by keeping customer-facing operations in the city whilst moving support functions elsewhere.