Demand-led rental inflation is significantly influencing Singapore’s Central Business District (CBD) office market, with vacancy rates for Grade A offices dropping to 5.6% in Q2 2026, according to Savills Singapore. This marks the lowest vacancy level since Q3 2022, driven by strong demand for premium office space and limited new developments.
The market’s resilience is evident as average rents rose by 2.8% quarter-on-quarter to a record S$10.42 per square foot, the strongest growth since Q4 2018. Grade AAA offices saw vacancy rates fall to 3.1%, the lowest since Q4 2013, highlighting the demand for high-quality office spaces. This has led to a two-tier leasing market, where premium buildings maintain high occupancy and command higher rents, whilst lower-quality buildings struggle to fill vacancies.
Savills has adjusted its 2026 rental growth forecast for CBD Grade A offices from 3%-5% to 5%, with a further 5%-7% increase projected for 2027. Alan Cheong, Executive Director of Research & Consultancy at Savills Singapore, noted, “Barring a significant deterioration in the political-economic sphere, even a marginal increase in office demand could result in disproportionately strong rental growth given the current supply constraints.”
Leasing activity has been buoyed by expansion demand from sectors such as technology, financial services, and hedge funds. The market also witnessed new entrants in the serviced office sector and expansion among smaller corporate service providers. As companies increasingly adopt five-day return-to-office policies, the pace of office space surrender has slowed, further supporting rental growth.
