Market Research

The office market is entering a tighter phase, with limited stock available and new supply restricted over the next 18 months. IOI Central Boulevard West Tower is technically full, Keppel South Central is filling up fast, and Shaw Tower will be the most significant office scheme completed this year, followed by 39 Robinson Road in early January 2027.

Larger occupiers with requirements for 2027 should ideally have secured space by now, or may need to wait for the new supply expected in 2028. Until then, activity is likely to be driven mainly by tenants that need to move, making independent market advice and access to off-market options increasingly important.

Many market commentators report that strong demand is driving up rents, but this depends on how demand is defined. Tenants actively seeking office space are certainly adding pressure, particularly where they are being displaced by redevelopment, upgrading to match competitors or moving to support regional growth and greater efficiency.

However, much of this activity does not represent significant new demand. Most expansions have been modest, displaced tenants are generally not taking additional space, and many upgrades involve higher budgets rather than larger footprints. As a result, overall take-up remains tepid, with the recent leasing activity appearing more impressive on the surface than it does on closer inspection. One notable exception is Allianz Insurance’s 78,000 sq ft lease at Shaw Tower, ahead of its relocation from CapitaSky in March 2027.

• The impact of forced relocations resulting from the redevelopment of HarbourFront Centre and 79 Anson Road will diminish, as most tenants have now found new homes.
• Flight to quality remains a key theme, but rising rents and limited availability mean tenants may need to compromise on location, timing or building specification.
• Rightsizing and space optimisation remain popular strategies for occupiers seeking to manage both cost and workplace efficiency, as seen in recent relocations by Shell, Allianz Insurance, ANZ Bank and Bank of New York Mellon.
• Demand could soften in 2027, but tenants needing space may still face strong competition due to the limited options in the market, with the knock-on effect of driving up rents.

Mode rental rates for most office buildings have inched up over the last quarter, with premium-range rates now around $14.50 to $15.00 per sq ft. Upper mid-range mode rates are still around $11.50 to $13.00 per sq ft, but there is now less room for negotiation. Lower mid-range mode rates have risen to between $9.00 and $10.00 per sq ft.

We anticipate rates could rise by around 3% in 2026 due to limited supply, with the new supply expected in 2028 unlikely to be factored in until later in 2027. In the meantime, rental negotiations will be tough for tenants, making backup options essential.