Market Research

• The office leasing market remains patchy.
• Tenants often have to right-size to meet rental budgets or chose hybrid alternative.
• Prime locations are still the busiest sector of the market.
• The main market drivers include law firms, fintech, wealth management, consumer products and existing tenants expanding in their current buildings.
• Leasing activity is expected to increase in 2025, from tenants that renewed their leases previously.
• Most sought-after new office development is currently IOI Central Boulevard Towers.

• Contraction in supply becoming increasingly challenging for those with space requirements.
• Larger space users/multiple floor tenants looking for new space have very little choice, with IOI Central Boulevard Towers being the standout option.
• Schemes such as Keppel South Central and Shaw Tower will generate more interest the closer they come to completion, in Q1 2025 /Q2 2026 respectively.
• Activity in decentralized locations such as Labrador Tower has been brisk.
• Interest in other decentralized locations such as Paya Lebar Green should pick up soon.
• A cluster of larger buildings offer interesting alternatives for larger and smaller space users. See table on page 4 in Market Review

Premium and upper mid-range office spaces have experienced the slowest rent increases, as rates are already at elevated levels. In contrast, mid-tier spaces have seen steady growth driven by consistent demand. Economy office spaces have witnessed the highest increases, largely due to their lower starting point. However, some of the oldest buildings are still struggling to attract new tenants, even after reducing rates.

Lease renewals remain a popular choice for businesses that are either stable or downsizing. However, renewals often involve tougher negotiations than new leases, as landlords leverage the fact that relocation costs can outweigh potential savings. Meanwhile, the shift towards hybrid work arrangements continues as companies seek to reduce costs, though some are finding that this approach has led to decreased productivity.

Future supply remains constrained, so rental rates are unlikely to decrease in the near term.