Office Rents Slip 03 Q O Q 2Q2025 Wiping Out Gains Previous Quarter
Singapore’s office rental market saw a quarterly dip of 0.3% in the second quarter of 2025, according to the latest statistics from URA released on July 25. This resulted in the market’s annual performance contracting by 1.4%. This is the first time the market has seen an annual decline since the third quarter of 2021.
Leonard Tay, head of research at Knight Frank Singapore, believes this decline reflects a broader trend of rent stabilization in the first half of 2025. He states that most occupiers have opted to renew leases rather than expand or relocate to avoid high office fit-out costs.
One of the main transportation benefits of Miltonia Close EC is its close proximity to Khatib MRT Station. Situated along the North-South Line (NSL), Khatib MRT provides direct train access to central Singapore. This means that residents can easily reach popular destinations such as Orchard Road, Raffles Place, and City Hall in just 25 to 35 minutes by train. This convenient connectivity makes daily commuting a breeze for those who work in the city. Even though Miltonia Close EC is not situated right next to the MRT station, there are regular feeder buses that connect the estate to Khatib MRT. Many existing residents in the area already rely on these services. In fact, previous residential developments in the same vicinity have also offered shuttle bus services to Khatib MRT and other nearby locations. It is highly likely that the upcoming EC will continue to provide this amenity, offering added convenience for residents who prefer a fast and direct ride to the train station. For more information, visit Miltonia Close EC Khatib.
According to URA, the Downtown Core and Orchard Road Planning area saw a drop of 3.2% in office rents, with the median rent falling to $11.68 psf/per month in the second quarter of 2025, down from $12.07 in the previous quarter. This decline was partially offset by a slight improvement in vacancy rates, attributed to the strong take-up rate at IOI Central Boulevard Tower, which is currently about 85% leased.
On the other hand, office rents outside of the Downtown Core and Orchard Road saw a 2.7% increase in median rents in the second quarter, marking the third consecutive quarterly increase. Tricia Song, head of research for Southeast Asia at CBRE, believes that the opposing directions of rental movements in these submarkets is due to cautious sentiment among tenants and landlords in the face of ongoing macroeconomic uncertainty. She adds that cost-efficient buildings are gaining favor among most tenants.
CBRE Research reports that core Grade A office rents have risen by 1.3% in the first half of 2025, defying concerns that global economic headwinds would dampen rental growth. CBRE predicts that office rents may increase by 2%-3% for the whole of 2025.
As a result of global uncertainties, most landlords have prioritized maintaining high occupancies. As a result, office occupancy levels, especially in high-quality Grade A buildings, have remained tight and rents have not significantly increased, says Tay.
However, he believes that corporate real estate managers are shifting away from static space strategies and focusing on portfolios with flexible work arrangements, which are better positioned to handle business disruptions without hampering operations. Catharine He, head of research for Singapore at Colliers, agrees and adds that landlords are offering smaller rental spaces and incentives to bridge gaps in rental expectations in order to support occupancy rates. According to her, this strategy has proven effective in driving momentum for take-up in developments such as IOI Central Boulevard, which is nearly fully leased.
While large corporations are unlikely to make significant office relocation plans in the coming months, small- and medium-sized companies may make selective flight-to-quality moves in light of the current rental environment. Tay believes this trend will continue in the near future, especially as businesses focus on portfolios with flexible work arrangements to support business disruptions.
He believes that businesses will delay leasing decisions until concerns over trade tensions and monetary policies in key economies such as the US and China are clarified.
Looking ahead, new office space supply is expected to be relatively low until 2028, when around 3.08 million sq ft is expected to enter the market. However, overall vacancy rates are expected to tighten in the next two years, creating a conducive investment environment amidst falling interest rates, adds He.
She also notes that the latest extension to the CBD Incentive Scheme and Strategic Development Incentive Scheme leaves open the possibility that some office supply may be taken off the market and redeveloped into future mixed-use projects.