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