Market Research

• Tenants are no longer under the false impression that ample space exists, with the number of choices clearly now more limited.
• A few buildings still have sizeable space for lease such as Marina One, but even supply there is shrinking with the arrival of SingLife and Murex. Capital Square had ample space available, but a whole floor (30,000 sq ft) has just been leased to Quantedge. Asia Square Tower is also filling out slowly but surely.
• It is noteworthy that IOI Central Boulevard is now 85% committed.
• The vast majority of Grade A Buildings now have high occupancy rates/low vacancies.
• Landlords have realized this for some while, which can make lease renewal negotiations trickier than normal.
• The completion of Keppel South Central added a further 435,000 sq ft to supply, but as mentioned on page 1, this is now 50% committed or under negotiation.

The vast majority of Grade A Buildings now have high occupancy rates/low vacancies.

Rental rates will remain flat for H1 2025, but may start edging forward in H2 2025. We are already witnessing there is less room to negotiate on quoted face rents than previously experienced. Extended rent-free fitting out periods have, for a long time, been a popular way for landlords to ‘disguise’ any rent free holidays offered, to lower the average effective rates and this practice is still prevalent.

Tenants are focusing these days on staff retention and staff attraction. Hence, demand for premium space remains firm whilst supply lasts and rates remain realistic. To square the circle, to avoid escalating costs, many tenants take less space but opt for a more efficient open plan design, for a higher density of staff. Others compromise, by using a hybrid solution, with a work-from-home policy on a rotational basis still common.

The shortage of supply will persist, and this will have a greater impact on rental rates later in the year with even tighter supply. Demand, whilst muted, has been boosted by a sizeable number of new entrants in the market, and from those moving from business centres to conventional office space. Moving the other way is Bayer South East Asia, who have just given up 50,000 sq ft in Paya Lebar Quarter and are moving to WeWork at 21 Collyer Quay.

Many uncertainties ahead for the global economy

New developments have been slow to attract pre-commitments from tenants. However, this seems to be the trend now. This is exactly how leasing activity evolved at IOI Central Boulevard, and what a success that turned out to be.

The same is happening at Keppel South Central, which has just secured its first anchor tenant, with Manulife leasing two whole floors (low-rise) and 50% of the offices are now either leased or under advanced negotiations.

Office rentals should be stable throughout 2025, but towards 2026 we expect rates could firm again by maybe 2% - 3% because of a shortage of supply