The vacancy rate for Grade A offices in Singapore’s Central Business District (CBD) surged to 8% in the fourth quarter of 2024, marking the highest level since early 2018, according to Savills Research. This increase, a 1.8 percentage point rise quarter-on-quarter, is largely attributed to the addition of the IOI Central Boulevard Towers to the office stock.
Despite the rise in vacancies, office rents continued to climb, with Grade AA offices experiencing the most significant increase. Rents for these offices rose by 1% quarter-on-quarter to S$10.73 per square foot, the fastest growth since mid-2019. Meanwhile, Grade AAA office rents increased by 0.7% to S$12.91 per square foot, the highest since early 2020.
The report highlighted that while the overall net demand for office space remained positive, it has moderated over the past three years, with 285,000 square feet absorbed in 2024 compared to 622,000 square feet in 2022. Submarkets such as Marina Bay saw the most substantial rise in vacancy rates, increasing by 7.6 percentage points to 12%.
Ashley Swan, Executive Director at Savills Singapore, noted, “Q4 saw an increase in leasing activity with IOI Central Boulevard leading the way in terms of transactions.” However, he cautioned that uncertainties from early 2024 persist, impacting net demand.
Looking ahead, Alan Cheong, Executive Director of Research & Consultancy at Savills Singapore, suggested that with limited new supply expected in 2025, CBD Grade A office rents may remain stable. He also pointed out that the impact of AI on office employment could become more apparent towards the end of 2025.
