AI firms boost office leasing demand as CBD Grade A rents climb 2% in 3Q2026
Growing AI occupier demand, falling premium CBD vacancy and limited new supply before 2028 signal continued rental pressure and could strengthen landlord confidence.
Core CBD Grade A office rents rose 2% quarter-on-quarter to $12.75 psf per month in 3Q2026, the strongest quarterly increase since 3Q2022.
Body
Artificial intelligence (AI) companies are emerging as a growing source of office leasing demand in Singapore, adding to an already resilient market led by financial services, professional services and technology firms.
The demand comes as Core CBD Grade A office rents climbed 2% quarter-on-quarter (q-o-q) to $12.75 psf per month in 3Q2026, up from 0.8% in the preceding quarter, according to CBRE. This was the strongest quarterly rental increase since 3Q2022.
Meanwhile, the Urban Redevelopment Authority's (URA) broader office rental index for the Central Region rose 0.8% q-o-q in 3Q2026, matching the increase in 2Q2026.
Read also: Keppel Reit to acquire 51% stake in Keppel South Central at $626.2 mil property value
Financial services remained the largest source of office leasing demand, accounting for 29% of new CBD leases in the first nine months of 2026, followed by professional services at 19% and technology at 16%, according to Cushman & Wakefield (C&W).
AI companies are also emerging as an increasingly significant source of demand, ranging from smaller firms taking up flexible workspaces to larger occupiers seeking dedicated premises in prime office buildings, says Tricia Song, CBRE head of research for Singapore and Southeast Asia.
For instance, Anthropic has reportedly committed to 100 desks at The Executive Centre in Ocean Financial Centre, while Manus AI is understood to be taking up about 10,357 sq ft, or half of the flexible workspace operated by Industrious at Keppel South Central.
According to June Chua, Newmark's senior managing director and head of Singapore leasing, some technology and AI firms are moving from serviced offices into their own premises, signalling a deeper commitment to Singapore and the region.
Sierra AI has reportedly leased about 10,000 sq ft of dedicated office space at Keppel South Central, while OpenAI is in advanced negotiations for approximately 120,000 sq ft across five floors at Shaw Tower. This would represent a substantial expansion from OpenAI's current footprint of about 100 desks at The Work Project's CapitaSpring facility, says JLL.
Office Rental Indices
The Downtown Core remained the most active office submarket, recording about 0.1 million sq ft of net demand in 3Q2026, accounting for 53% of islandwide net demand during the quarter, says Wong Xian Yang, C&W head of research for Singapore and Southeast Asia.
Read also: Two office floors at Springleaf Tower offered for sale with $54.15 mil price tag
"This marks its sixth consecutive quarter of positive net demand, likely supported by higher take-up at new developments such as Shaw Tower and Keppel South Central, particularly from technology occupiers," adds Wong.
Meanwhile, islandwide office vacancy fell to 10% in 3Q2026 from 11% in the preceding quarter, its lowest level since 1Q2024.
The decline reflected both resilient occupier demand and the withdrawal of existing office space from the market for redevelopment, says CBRE's Song.
According to URA data, occupied office space rose by 17,000 sq m (close to 183,000 sq ft) in 3Q2026, while the overall office stock contracted by 72,000 sq m (775,000 sq ft).
CBRE attributes much of the contraction to the likely withdrawal of office space at 79 Anson and HarbourFront Centre for redevelopment.
The tightening was particularly evident in the premium CBD office segment, where vacancy fell to 2.6% from 3.3% in 2Q2026, notes CBRE's Song.
Read also: Offices get pricier to rent and buy in 2Q2026, pipeline supply dwindles
According to JLL, only two non-strata office developments are expected to enter the market over the next two years: the refurbished Robinson Point by end-2026 and Newport Tower in 2027.
URA data shows that about 94,000 sq m of gross office space is scheduled for completion in 2027, before supply rises to 319,000 sq m in 2028.
With limited new office supply expected before 2028, consultants anticipate further rental growth.
CBRE's Song expects Core CBD Grade A office rents to rise by more than 5% in 2026, the strongest annual growth since 2022.
C&W's Wong maintains his forecast of 4% to 5% growth in CBD Grade A office rents for the full year. Similarly, Newmark's Chua expects premium and Grade A office rents to rise by 4% to 5% this year.