Singapore office rents dip slightly in Q1 as prime segment strengthens

Overall rents slipped 0.2% during the quarter.

Singapore’s office market posted a mixed performance in Q1 2026, with overall rents edging down even as prime Grade A indicators continued to strengthen, according to CBRE, citing Urban Redevelopment Authority (URA) data.

URA’s Office Rental Index for the Central Region slipped 0.2% quarter-on-quarter in Q1 2026, reversing a 0.4% uptick in the previous quarter. However, CBRE’s analysis of underlying transaction data suggests the softness was largely concentrated in smaller units, rather than signalling a broad-based decline.

CBRE noted that rents for Category 1 office space in the 200–500 sq m band fell 9.2% q-o-q, dragging down the headline figure. In contrast, larger floor plates above 1,000 sq m — a proxy for prime Grade A space — rose 2.3% q-o-q, reflecting continued demand for large, contiguous offices.

This trend aligned with CBRE’s own data, which showed Core CBD Grade A rents rising 0.8% q-o-q to $12.40 psf per month, marking a fifth consecutive quarter of growth. Vacancy in the same segment tightened to 3.3%, underscoring increasingly landlord-favourable conditions.

Leasing activity remained healthy despite the absence of major new completions, which helped sustain a tight supply-demand balance. URA data showed islandwide net absorption increased by 0.28 million sq ft in Q1, while vacancy declined to 10.8%, continuing a steady downtrend from 11.7% a year earlier.

CBRE data similarly pointed to robust demand, with 0.2 million sq ft of net absorption recorded in Core CBD Grade A space. Occupiers continued to prioritise prime, well-located and ESG-compliant buildings, with some securing additional space for future expansion.

“Flight-to-quality” demand remained evident across key developments such as IOI Central Boulevard Towers, Marina One and Marina Bay Financial Centre, where tenants sought large, high-specification floor plates.

Sectoral demand was broad-based, led by financial services firms across banking, wealth and asset management, and trading. CBRE also highlighted growing demand from AI firms transitioning from coworking spaces into dedicated offices, while flexible workspace operators continued expanding to support startups and new market entrants.

Looking ahead, Tricia Song, CBRE Head of Research for Singapore and Southeast Asia, said the office market is expected to remain landlord-favourable through 2026, supported by strong occupier demand, limited new supply and low vacancy levels.

Song noted that large contiguous spaces above 20,000 sq ft will remain scarce, with pre-commitments already secured for projects completing as far out as 2029. Shaw Tower is the only major completion expected this year, keeping the near-term pipeline thin.

While global uncertainties pose downside risks, CBRE maintains a positive outlook, citing Singapore’s position as a regional hub and resilient fundamentals. The firm is forecasting around 5% year-on-year rental growth for Core CBD Grade A offices in 2026.