CBD office tightness drives another quarter of rental growth as vacancy hits near three-year low

• Singapore CBD Grade A office rents rose 1.0% in Q3 2026, bringing year-to-date growth to 2.8%, as vacancy fell to its tightest level in 10 quarters.
• AI and technology firms, including OpenAI, Sierra AI, and Manus AI, drove demand with large-scale leasing commitments, reinforcing Singapore's position as a regional AI hub.
• Limited new supply until 2028 and early renewal negotiations by large occupiers signal a market where planning ahead has become essential for securing prime space.

SINGAPORE, 28 September 2026 – Singapore's CBD Grade A office market recorded another quarter of rental growth in Q3 2026, with gross effective rents rising 1.0% quarter-on-quarter, according to JLL Research. This brings our cumulative growth in the first three quarters of growth to 2.8%, matching the pace observed during the same period last year.

Overall CBD office vacancy fell to its tightest level in ten quarters, driven by the strong take-up in the Marina Bay sub-market, where limited availability of large-format space has narrowed the rental gap between large and small office units as tenants compete for scarce, high-quality options.

Office demand remained resilient with companies on strong growth trajectories moving decisively to lock in prime space in an increasingly constrained market. Technology and AI firms were the standout driver of this momentum. OpenAI is reportedly in advanced negotiations for approximately 120,000 square feet (sq ft) across five floors at the newly completed Shaw Tower in Marina Centre, a substantial expansion from its current footprint of roughly 100 desks at The Work Project's CapitaSpring facility. Sierra AI and Manus AI have also reportedly taken space at Keppel South Central in the Shenton Way/Tanjong Pagar sub-market. This wave of AI sector expansion points to Singapore's continued standing as a regional hub for AI firms expanding across Asia Pacific, underpinned by its strategic location, strong government support for AI adoption, and a high concentration of multinational corporations increasing generative AI spend.

Occupier behaviour is also shifting in response to tighter conditions. Large occupiers of 50,000 sq ft and above are initiating renewal negotiations earlier, with some now beginning discussions 18 to 24 months ahead of lease expiry to secure certainty over their space. At the same time, a growing number of large-space occupiers are exploring a relocation to Orchard as prime CBD options tighten. Deloitte, for example, is moving from OUE Downtown 2 to Orchard Central, with a portion of its staff relocating in the interim to JustCo's new co-working facility at Orchard Point that opened in September.

Michael Glancy, Country CEO, Singapore & Southeast Asia, JLL comments, “What stands out this quarter is how decisively AI and technology firms are moving to secure space, even as broader macroeconomic headwinds remain unresolved. Companies with strong growth trajectories are committing without waiting for economic certainty. Simultaneously, large occupiers are negotiating renewals up to two years ahead of expiry, locking in space before tightness appears in headline vacancy figures. Meanwhile, the desire for unconventional, lifestyle-driven workspaces to attract talent is steering some large-space occupiers beyond the tight CBD toward Orchard. In this market, planning ahead has become essential.”

Dr Chua Yang Liang, Head of Research and Advisory, Southeast Asia, JLL adds, “Singapore's economic backdrop has strengthened over the quarter. Final Q2 GDP growth was revised upwards, prompting the government to upgrade its full-year 2026 growth forecast to 4.5% to 5.5%, from 2.0% to 4.0% previously. This improved growth outlook, together with Singapore's role as a regional technology and innovation hub, is translating directly into occupier demand, as the AI sector's rapid office expansion this quarter demonstrates."

The near-term scarcity of office space in Singapore persists without relief in sight. Newport Tower will be 2027's single non-strata development to reach completion. Substantial new supply won't materialise until 2028, confined to The Skywaters, The Clifford, One Comcentre, and Union Square Central, while the overall development pipeline remains limited beyond that point.

Dr Chua adds, “The pattern emerging is a market that continues to tighten with limited new supply arriving. Capital markets activity reflects confidence in the underlying fundamentals, from Hongkong Land establishing its first private real estate fund in Singapore early this year to its recent Wheelock Place acquisition, alongside a fresh wave of CBD assets coming to market. Though interest rates have started to creep up, they remain well below the 2023-2024 peak levels.”

Glancy concludes, "A tightening market is prompting companies to think harder about how they use the space they already have, not just how much more they need. We're seeing more occupiers commission workplace studies before committing to expansion, which is a healthy sign of a market maturing rather than simply chasing floor area. Looking ahead, the buildings that will command the strongest tenant interest are those that go beyond square footage. Building owners are recognising this shift, with assets such as 60 Anson and 78 Shenton Way undergoing upgrades to remain competitive."

JLL maintains its 2026 full-year CBD Grade A rent growth forecast at approximately 4%, with a cumulative 5-year rental growth of around 15% projected through 2030.

1. What's driving rental growth in Singapore's CBD office market?
 

Two factors: strong demand from AI and technology firms expanding in the region, and limited availability of large-format Grade A space. Vacancy fell to its tightest level in 10 quarters in Q3 2026.

2. How are large occupiers responding to tighter market conditions?
 

Large occupiers (50,000 sq ft and above) are initiating lease renewal negotiations 18 to 24 months ahead of expiry to secure space before options narrow further. Some are also exploring relocations to Orchard as prime CBD options tighten.

3. When will new supply ease the market?

Limited new supply is expected through 2027, with Newport Tower the only non-strata development reaching completion that year. Substantial new supply won't materialize until 2028, with projects including The Skywaters, The Clifford, One Comcentre, and Union Square Central.

4. What is JLL's full-year 2026 rent growth forecast for Singapore CBD Grade A offices?

JLL maintains its 2026 full-year forecast at approximately 4% rent growth, with cumulative 5-year growth of around 15% projected through 2030.