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Office rents in Singapore’s Central Region have dropped slightly in the third quarter of 2025, a result of landlords adjusting their expectations due to strong occupier demand and a limited supply of new office space.

According to data from the Urban Redevelopment Authority (URA), office rents in the Central Region fell 0.1% quarter-on-quarter, driven by a 0.1% decrease in the Central Area, while the Fringe Area saw a 0.2% increase.

“The marginal dip may have been driven by older offices, as landlords became more flexible on rents to retain tenants amid continued flight-to-quality trends and a softer economic backdrop,” says Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield (C&W).

Prime offices in the Downtown Core and Orchard areas saw rents bounce back with a 2.5% increase quarter-on-quarter, after two quarters of decline. This was accompanied by a tightening of vacancy rates to 9.9% from 11% in the previous quarter.

“This reflects steady take-up of prime space amid easing interest rate concerns,” notes Wong.

C&W’s Grade A CBD office basket recorded a strong net absorption of 197,000 sq ft in the third quarter, up from 185,000 sq ft in the previous quarter, which shows a sustained demand for modern and amenity-rich workplaces.

In the meantime, Category 2 offices outside of Category 1 saw rents stabilise after three quarters of growth, with vacancy rates rising marginally to 11.7% from 11.6%.

“The market continued to rebalance amid ongoing flight-to-quality activity,” says Wong.

The data from URA also showed that there were no new office completions in the third quarter of 2025, with net supply contracting by 0.26 million sq ft, which led to a further decrease in vacancy rates to 11.2% from 11.4% in the previous quarter.

“The decline in vacancy reflects continued absorption of major 2024 completions such as IOI Central Boulevard Towers, Keppel South Central, and Paya Lebar Green,” says CBRE’s head of research for Singapore and Southeast Asia, Tricia Song.

“While most quality buildings are nearly at full occupancy, landlords remain focused on tenant retention,” adds Leonard Tay, head of research at Knight Frank Singapore.

He also notes that a subtle flight-to-quality trend persists, with occupiers right-sizing or modestly expanding upon lease renewals, taking advantage of stable rents to upgrade into newer buildings with better connectivity and amenities.

URC’s office price index for the Central Region fell 0.2% quarter-on-quarter in the third quarter, which represents the fourth consecutive quarterly decline; however, the gradual rate may indicate that the office capital market is approaching a trough.

Prices have fallen 1.4% year-to-date and 2.1% year-on-year since the third quarter of 2024.

According to C&W, the median unit price for Central Region office transactions has decreased to $1,995 psf from $2,127 psf in the previous quarter, reflecting a higher proportion of lower-priced deals. Nonetheless, the strata office segment remains resilient, with 280 transactions lodged year-to-date, which is already 84% of the full-year total in 2024.

The CBD Grade A pipeline remains limited, with only Shaw Tower (mid-2026) and Newport Tower (2027) expected to add approximately 0.6 million sq ft of net leasable space over the next two years. This figure is approximately one-third of the historical annual demand.

C&W also observed that shadow space in CBD Grade A offices has declined to 0.1 million sq ft, the lowest it has been in nine years, which highlights the healthy interest from occupiers.

“While some negative net demand was recorded in the Outside Central Region (OCR) and Rest of Central Region (RCR) due to stock removals from demolitions, we expect relocation activity to accelerate from 2026,” says Wong.

“Demand for Grade A offices remains firm as occupiers prioritise modern, well-located developments,” he adds. “With lower global interest rates projected, expansion activity should pick up as business confidence is renewed.”