The Urban Redevelopment Authority’s (URA) Q2 2025 statistics reveal a 0.3% quarter-on-quarter decline in the office rental index for Singapore’s Central Region, following a similar growth in the previous quarter. This decrease is attributed to lower rents at new projects aimed at attracting tenants. The occupied office space increased by 9,000 square metres in Q2 2025, a notable recovery from the 1,000 square metre decline in Q1 2025, driven by the uptake of smaller spaces in newly completed projects.
Colliers’ research indicates that Grade A office rents remained resilient, with some premium buildings achieving higher rents despite global economic uncertainties. Tenants are favouring renewals over relocations or expansions, although some are moving to quality spaces to attract and retain employees whilst optimising efficiency and value per square footage. Landlords are responding by offering smaller spaces and various incentives to meet rental expectations, successfully driving occupancy in developments like IOI Central Boulevard, which is nearing full occupancy.
The demand for quality office space remains healthy, with rapid backfilling of vacated spaces, particularly those with quality fit-outs. With new supply not expected until 2027, vacancy rates in this segment are predicted to tighten further. The extension of the Central Business District Incentive (CBDI) and Strategic Development Incentive (SDI) schemes could lead to more office supply being redeveloped into mixed-use projects.
For the rest of 2025, office demand is expected to remain diverse across industries, with movements driven by changes in corporate operational requirements. Businesses may delay leasing decisions amid global monetary and trade policy uncertainties. Occupiers and landlords are likely to adopt a conservative approach, with landlords being more selective in tenant selection to maintain stable long-term occupancy. Despite these challenges, high office attendance and limited new supply are expected to support rental growth in Grade A offices.
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