CBD vacancy falls below 3% in Singapore offices

Low supply and steady demand tighten the market, pushing rents higher.

Singapore’s office rental market is entering a supply-driven upswing, with tightening vacancies pushing Grade A rents higher and raising concerns over sustained cost pressures for occupiers.

The key driver behind the recent growth is not a surge in demand, but constrained supply. According to Colliers’ Managing Director of Office Services in Southeast Asia, Chris Archibold, “the supply pipeline is relatively low… vacancies have dropped off, and that has caused rental growth,” highlighting how limited new stock has tightened the market.

Grade A office rents have already reached around $12, with Prime Grade A at $13, and are expected to climb further in the next six to 12 months. The imbalance between steady demand and restricted supply has compressed vacancy rates to critical levels, with CBD vacancy now sitting at “a sub 3% vacancy,” Archibold said, noting that “whichever way you cut it, that's a low vacancy.”

These conditions are drawing comparisons to past rental spikes. During the 2006 to 2008 cycle, rents surged sharply when vacancies fell below 2%. However, the current cycle begins from a higher base, suggesting that any further tightening could exert stronger pricing pressure across the market.

Demand remains broad-based but is increasingly shaped by financial services. Growth in fintech, private banking and family offices is supporting leasing activity, with family offices expanding from around 400 in 2020 to over 2,000 today. This influx, whilst not large in footprint individually, signals structural demand that is reinforcing occupancy levels.

Singapore’s regional positioning continues to underpin its appeal. Justin Chen, Chief Executive Officer of Arcc Spaces, said “Singapore is in a very attractive market within Asia,” supporting continued business expansion despite rising costs.

At the same time, occupier behaviour is evolving. The “flight to quality” remains dominant, with companies prioritising well-located, high-amenity buildings to attract employees back to the office. Archibold said “100% there is a flight to quality,” though demand still exists across older and smaller buildings, reflecting varied industry needs.

Beyond location, the role of the office itself is shifting. Firms are reassessing space requirements after years of remote work experimentation, focusing on collaboration and culture. Offices are increasingly viewed as hubs for “team retention… collaboration… sense of belonging,” rather than purely functional workspaces.

With supply expected to remain tight over the next two years, the market outlook points to continued rental growth. For businesses, the challenge will be balancing rising occupancy costs with evolving workplace strategies in an increasingly competitive leasing environment.