Singapore Grade A Office Market Records Sixth Consecutive Quarter of Rental Growth Amid Shifting Global Landscape

Singapore – 25 June 2026 – The Singapore office market has extended its run of rental gains into Q2 2026 despite economic uncertainty and geopolitical tensions. In this quarter, Core CBD (Grade A) rents have edged up 0.8% quarter-on-quarter to S$12.50 per square foot per month, the sixth straight quarter of growth, according to CBRE Research.

Cumulatively, Core CBD (Grade A) rents have advanced 1.6% in the first half of 2026, with upside potential going forward as macro conditions show potential for stabilisation. This allows CBRE Research to maintain its full-year forecast of approximately 5% year-on-year growth.

Landlords of Core CBD Grade A buildings are operating with significant pricing power. Tricia Song, CBRE Head of Research, Singapore and Southeast Asia, noted, “The absence of new completions through 2027 means that the structural undersupply underpinning this rental cycle is not a short-term phenomenon. Cumulatively, Core CBD Grade A vacancy has contracted from a high of 7.8% in Q4 2024 when IOI Central Boulevard Towers was delivered to the market, to 3.3% today - a compression of over four percentage points over just six quarters.”

“The market’s continued performance reflects a structural imbalance between occupier demand and available supply. Core CBD (Grade A) vacancy held firm at 3.3% - a record low - as the completion of Shaw Tower in the Fringe CBD marks the close of all meaningful new supply for 2026, with no further significant completions projected through 2027”, Ms Song continued.

Shaw Tower Completion Marks End of Near-Term Supply Pipeline

Shaw Tower, the sole major office completion of 2026, received its Temporary Occupation Permit in Q2. Its anchor and corporate tenants include global insurer Allianz, payments technology firm Adyen, pharmaceutical company Sanofi-Aventis Singapore, and premium coworking operator The Great Room.

Together with Keppel South Central, these two developments form a compelling cluster of quality options in the Fringe CBD, offering occupiers good alternatives to the increasingly-constrained Core CBD stock.

Diverse Demand Base Extends Beyond the Core CBD

Occupier activity this quarter was notably broad in both sectoral composition and locational spread. Within the CBD, AI companies of varying scales continued to transition from flexible coworking arrangements into traditional, self-managed office space, affirming their growing operational permanence in Singapore.

Beyond the CBD, the Alexandra and Paya Lebar submarkets saw active take-up, with demand anchored by occupiers from the public, consumer goods, professional services, and education sectors relocating to these decentralised areas. The withdrawal of Harbourfront Centre from the active stock further tightened supply at the islandwide level. Taken together, islandwide vacancy fell sharply from 5.6% in Q1 2026 to 3.6% in Q2 2026.

David McKellar, CBRE Head of Leasing, Singapore, observed, “What stands out this quarter is the depth and diversity of demand. We are no longer seeing growth carried by one or two dominant sectors. Financial services - spanning banking, wealth management, insurance, and asset management - remain active, but they are now joined by a meaningful cohort of AI businesses of all sizes, as well as professional services occupiers, among others, in decentralised locations. This breadth gives us greater confidence in the durability of the rental recovery.”

He added, “What is particularly telling is the behaviour of AI occupiers. These firms have been incubating in Singapore for the past two to three years, predominantly within coworking environments. Their graduation into permanent, dedicated office space this year signals a maturation of this cohort - signalling their commitment to Singapore for the medium to long term, and with that comes a desire for operational certainty, brand presence, and the ability to customise their space.”

Occupiers Act with Urgency as Available Options Diminish

The scarcity of quality space is increasingly shaping occupier behaviour. Enquiries from hedge funds, quantitative trading firms, and AI companies - across a wide spectrum of sizes - remain elevated, even as available options continue to shrink. Pre-commitment activity for developments scheduled for completion only as early as 2028 or 2029 has grown, with ongoing lease negotiations for these future buildings now forming a meaningful part of the pipeline.

For occupiers with medium-term requirements, the window to secure quality space on favourable terms is narrowing. Mr McKellar shared, “While some tenant resistance to prevailing rents has been understandably observed, the fundamental market dynamic remains firmly in landlords’ favour. We are advising occupiers with requirements in the next two to three years to engage the market now, as conditions are not likely to ease.”

CBRE Outlook

CBRE maintains its forecast of approximately 5% year-on-year rental growth for Core CBD (Grade A) offices by the end of 2026, with upside potential should global conditions significantly improve in the second half of the year. The ongoing oil supply situation and geopolitical uncertainties remain variables to monitor. However, early indications of near-term resolution - should they materialise - could provide a meaningful lift to business confidence and accelerate leasing activity.

Importantly, CBRE has yet to observe material signs of occupier space rationalisation. Even in a more cautious global environment, Singapore’s office market has historically demonstrated a stronger-than-average recovery relative to other markets following any pause in activity.

Ms Song concluded, “Singapore has navigated geopolitical and macroeconomic headwinds before and has consistently emerged with its office market fundamentals intact. With no new supply arriving for the foreseeable future, even a moderate softening of external pressures - such as easing oil market volatility - could translate into a meaningful uplift in leasing confidence in H2 2026. Landlords who adopt a pragmatic approach to lease structuring and timing will be well-placed to capture this potential.”