Singapore’s office rents stay resilient amid global uncertainties: JLL

Singapore's office rents stayed flat for the second consecutive quarter in 4Q24 despite looming global economic uncertainties, including potential policy changes associated with the Trump 2.0 administration.

Latest data from JLL Research revealed that the gross effective rent for the Central Business District (CBD) Grade A office rents inched up 0.3% quarter-on-quarter (qoq) to SGD 11.53 per square foot (sq ft) per month in 4Q24. This comes after rents held flat at SGD 11.50 per sq ft per month in 3Q24. For the full year of 2024, CBD Grade A office rents have grown 2.4%, an improvement from the 0.7% growth recorded in 2023. 

Monthly Gross Effective Rents and Vacancy for CBD Grade A Office Space

Source: JLL Research

Dr. Chua Yang Liang, Head of Research and Consultancy for JLL Southeast Asia, comments, “Landlords' laser focus on tenant retention and maintaining occupancy in the midst of rising market anxiety, yielded results as the CBD vacancy reversed a two-quarter increase to fall back to 6.9% in 4Q24. This is down from its peak of 8.3% in 3Q24.”

Andrew Tangye, Head of Office Leasing and Advisory for JLL Singapore, adds, “The commitment levels in new developments have been stronger in the second half of 2024 and hopefully some of that leasing momentum will feed into 2025. For example, IOI Central Boulevard Towers is likely to be 80% or more committed in 1H25 and Keppel South Central, which completes in 1Q25, is now in advanced negotiations to secure their first commitment.  

Office spaces spanning 2,000-5,000 sq ft are leasing up faster due to a strong demand base from tenants in the investment management, professional services, and emerging tech sectors.

Many landlords are now offering “capex light” leasing solutions such as providing a ready-fitted unit or capex subsidies to sweeten the deal and help tenants overcome their capital constraints.

Notably, the rent performance of office buildings in the Raffles Place sub-market outperformed the other sub-markets in 4Q24 due to its strategic location and the landlords' willingness to subdivide their spaces to cater to these smaller tenants.”

Tangye concludes, "Vacancy rates may fluctuate over the next 6-12 months due to Keppel South Central's completion and space releases from tenants relocating to their new spaces. However, excluding new stock additions, CBD vacancy is projected to remain tight, with the Prime Grade basket experiencing even lower vacancy at below 4% The vacancy rate is expected to continue to decline, driven by the growing flight-to-quality and return-to-office trends. Additionally, moderate economic growth encouraging business expansion and hiring could boost office demand in the medium term."

Echoing that, Dr. Chua states, “Rents could continue to stay flat for the next quarter or two but are set for some recovery in the second half of 2025 amid strengthening global demand. The current rental climate and space availability present a brief opportunity for occupiers to expand or upgrade before supply starts tightening between 2H25 and 2027.”  

On the investment sales market front, Singapore's office sector exceeded deal-making expectations in 2024, with two transactions surpassing SGD 500 million each. In November 2024, Capitaland Integrated Commercial Trust divested 21 Collyer Quay to an unrelated third party which is reportedly linked to the Haidilao co-founders’ family for SGD 688 million. The exit yield for the 999-year leasehold property is reportedly below 3.5%. This follows the sale of the 99-year leasehold Mapletree Anson for SGD 775 million in May 2024.

Ting Lim, Head of Capital Markets for JLL Singapore opines, "Developers are now more open to divesting their assets, contributing to a new pipeline of projects slated for sale in 2025. Investors, on the other hand, are also likely to become more active, especially in 2H25 driven by successful capital raising efforts, potential interest rate corrections and improving conditions in the occupier market.”