Office Rents Climb Higher In Q2 As Limited CBD Supply Keeps Market Tight
The latest Business Times report highlights a clear turning point in Singapore’s office market: despite global uncertainty, prime CBD office rents continue to rise. According to CBRE, Core CBD Grade A rents rose 0.8% quarter-on-quarter to S$12.50 psf per month in Q2 2026, marking the sixth straight quarter of rental growth. CBRE also expects about 5% year-on-year rental growth for 2026.
Why Office Rents Are Still Rising
The main driver is not simply stronger demand. It is the lack of new high-quality CBD office supply. After Shaw Tower’s completion, the next major additions to CBD Grade A supply are limited, with Newport Tower expected in 2027 and larger future supply only coming later. Cushman & Wakefield noted that new CBD Grade A completions in 2026–2027 are expected to average just 0.4 million sq ft annually, below the 10-year net demand average of 0.9 million sq ft. This explains why landlords remain in a stronger position despite a cautious macro environment.
The CBD Is Benefiting From A Flight To Quality
The office market is increasingly split between premium Grade A buildings and older secondary stock. Large corporates are not necessarily taking up more space overall, but many are upgrading to newer, greener, and better-located buildings. This “flight to quality” supports rents in Marina Bay, Raffles Place, and Tanjong Pagar, while older buildings may face greater pressure from right-sizing and relocation.
AWS is one of the clearest examples. Its Asia-Pacific Hub at IOI Central Boulevard Towers spans more than 360,000 sq ft across eight floors and can accommodate up to 3,000 employees. Morgan Stanley also pre-leased just over 100,000 sq ft across five floors at IOI Central Boulevard Towers, reflecting continued demand from major financial institutions. Zoom also opened a 7,500 sq ft office in Singapore at IOI Central Boulevard’s West Tower, replacing its previous co-working office at Asia Square Tower 2.
Other Companies Taking Space In The CBD
Besides AWS, Morgan Stanley and Zoom, market activity has also been supported by Shell’s reported interest in taking over Amazon’s former Asia Square Tower 1 space, after Amazon consolidated into IOI Central Boulevard Towers. Keppel South Central has also secured a leading financial services group as its first anchor tenant, with nearly 50% of its office and retail space either committed or under active negotiation at completion.
This shows that demand is not coming from one sector alone. Financial services, technology, AI, insurance, professional services and flexible workspace operators are all active. Colliers has specifically noted that international AI companies are seeking regional hubs in Singapore, while fintech firms, co-working operators and insurance companies are also taking up office space.
Why This Matters For Landlords
For owners of prime CBD assets, the market remains landlord-favourable. Vacancy is tightening, shadow space is shrinking and large contiguous spaces are becoming harder to secure. Cushman & Wakefield reported that CBD Grade A shadow office space declined to 93,000 sq ft in Q3 2025, a nine-year low, reinforcing the scarcity of quality office space.
This allows landlords of newer buildings to hold rents more firmly. Buildings with strong ESG credentials, efficient floor plates, direct MRT access, high-quality amenities and strong branding are likely to outperform.
Why This Matters For Tenants
For occupiers, the implication is clear: companies with lease expiries in 2026 or 2027 may have fewer attractive options if they wait too long. The market is especially tight for large floor plates in newer CBD buildings. Tenants seeking premium locations may need to compromise on either rent, building quality, location or timing.
Some companies may therefore consider decentralised locations such as Buona Vista, Paya Lebar, Labrador Park or Jurong East. However, for firms that rely heavily on client-facing presence, talent attraction and regional headquarters branding, the CBD remains difficult to replace.
Investment View
The bigger story is that Singapore’s office market is showing structural resilience. Hybrid work has not destroyed demand for prime offices. Instead, it has changed the type of space companies want. Firms may lease less space per employee, but they increasingly want better-quality space that supports branding, collaboration, wellness and staff retention.
This benefits Grade A CBD landlords but may widen the gap between prime and older office buildings. Investors should therefore distinguish between “office market recovery” and “prime office recovery”. The former may be uneven, while the latter remains supported by limited supply and sustained occupier demand.
The Best Office Space Remains Scarce
Singapore’s CBD office rents are rising because the best office space is scarce, not because every company is expanding aggressively. Major occupiers such as AWS, Morgan Stanley, Zoom, and Shell, along with replacement demand and financial services tenants at Keppel South Central, show that prime CBD buildings remain highly relevant. The market is becoming more selective, but for well-located Grade A assets, the balance of power still sits with landlords.
Disclaimer: This article is intended for informational and educational purposes only. It contains the author’s independent analysis and opinions based on publicly available information, industry reports, market observations and news sources available at the time of writing. References to specific companies, office developments, leasing transactions or market trends should not be interpreted as endorsements, guarantees or confirmation of future performance. While every effort has been made to ensure the accuracy of the information presented, market conditions, rental rates, occupancy levels and corporate leasing decisions may change over time. Readers should conduct their own due diligence and seek professional advice before making any investment, leasing or business decisions based on the information contained in this article.
Article contributed by Jerry Wong.
Jerry Wong is a realtor at Propnex Realty, bringing a rich background in interior and lighting design to his work. He loves exploring diverse spaces and observing the transformative power of real estate. Beyond his professional role, Jerry finds his greatest fulfillment in connecting people with the right properties, gaining immense satisfaction from helping clients achieve their dreams.
