Singapore's office rents continued their upward trajectory in the second quarter of 2026, marking the sixth consecutive quarter of growth. This surge is primarily driven by a constrained supply in the Central Business District (CBD) and robust demand from the artificial intelligence (AI) and financial services sectors. Rents for core CBD Grade A office spaces increased by 0.8% quarter-on-quarter to S$12.50 per square foot (psf) per month, according to CBRE data, while JLL reported a 1.1% rise to S$12.19 psf per month.
Several factors contribute to this tight market. The Marina Bay area remains a key demand driver, with prime buildings like IOI Central Boulevard Towers nearing full occupancy. Companies, particularly in AI and fintech, are increasingly committing to premium, well-located spaces, often ahead of their immediate needs. This flight-to-quality trend is evident with Shell pre-committing approximately 100,000 square feet at Asia Square Tower 1 and Databricks expanding its footprint at IOI Central Boulevard Towers. AI firms, previously occupying co-working spaces, are now moving into permanent offices, signaling their long-term commitment to Singapore.
Despite the completion of Shaw Tower, which temporarily edged up overall CBD vacancy from 6.3% to 6.7%, the underlying market remains supply-constrained. Excluding this new supply, vacancy actually fell to 5.6%, the lowest in nine quarters, as demand outpaced new deliveries. Analysts predict that rents will continue to rise by 3% to 5% year-on-year, supported by a limited pipeline of new Grade A office supply. Shaw Tower is the only major Grade A completion in 2026, with only Newport Tower slated for 2027, and significant new supply not expected until 2028.
While some tenants are rightsizing or relocating to smaller spaces to achieve rental savings, expanding companies are predominantly in the fintech sector. The tight CBD supply has also prompted some firms, such as ByteDance, to consider decentralised locations like Mapletree Business City. The government's support for the AI ecosystem and Singapore's growing reputation as an AI hub are attracting global AI firms, further fueling office demand, though some analysts suggest AI could also lead to demand destruction by reducing the need for office workers in the long term, potentially creating a risk of an office glut after 2027 if new demand doesn't materialize.
Singapore's prime office vacancy rate reached a region-low of 3.3% in Q2 2026, the lowest among 24 Asia-Pacific cities. Prime rents increased by 1% quarter-on-quarter and 2.7% year-on-year to S$11.69 psf per month. Occupancy costs in Singapore are high, at S$128.58 per square foot per year, more than double the regional median. The limited new supply, projected at 450,000 square feet in 2026 and dropping to around 250,000 square feet in 2027, is expected to maintain the constrained availability in the core business district.
