AI to reshape, not reduce, demand for Singapore Grade A offices: C&W
Limited prime supply and businesses’ flight to quality may support Grade A rents while widening the segment’s 48% rental premium over Grade B offices.
Cushman & Wakefield projects Singapore CBD Grade A office vacancy at 1.5%–4.9% by 2030, versus 4.4% at end-2025, across four AI-adoption scenarios.
Body
While the growing adoption of AI is set to reshape how businesses use the workplace, it is unlikely to significantly reduce demand for Grade A office space in Singapore, according to Cushman & Wakefield.
In a September research report titled AI Impact: Office Insights Singapore, the real estate services firm studied the potential impact of AI adoption on Singapore’s economy, workforce and commercial real estate through to 2030.
The study looked at four scenarios with different assumptions relating to the rate of AI adoption, along with economic and labour market impact. The scenarios represent a spectrum of potential outcomes — AI-led productivity expansion driving increased demand for office space on one end, and AI-driven labour displacement weakening leasing demand on the other.
Read also: Five construction tech startups to showcase innovations at Apac pitch day in Singapore
Based on the scenarios, CBD Grade A office vacancy in Singapore is projected to range between 1.5% and 4.9% by 2030, compared to 4.4% as at the end of 2025. Meanwhile, rental movement for Grade A offices could range from 6.5% growth to a decline of 2.3% in 2030. In comparison, rents grew by 2.2% in 2025.
The range of outcomes indicates a “resilient” prime office market, with vacancy remaining below 5%, noted Dr Dominic Brown, head of international research at Cushman & Wakefield. “It shows why the impact of AI on real estate cannot be understood through jobs alone — supply, productivity, business growth and the changing role of the workplace all matter.”
Among the four scenarios modelled in its study, Cushman & Wakefield posits a baseline scenario that assumes moderate productivity gains from steady AI adoption, along with stable employment levels supported by continued hiring in office-intensive industries.
Against this backdrop, the firm expects demand for higher-quality workspaces to be reinforced, even as some work gets replaced by AI. “As routine activities become increasingly automated, workplaces are expected to play a greater role in collaboration, innovation and client engagement,” Brown explained.
Consequently, as more businesses gravitate to better workspaces, the flight to quality could widen the existing gap between prime and non-prime workspaces. According to Cushman & Wakefield, Grade A offices command a rental premium of 48% over Grade B offices as of 2026, increasing from 34% in 2019.
At the same time, new prime office supply remains limited, which will further support the Grade A market. Cushman & Wakefield projects vacancy for Grade A offices in the CBD to tighten to 3.7% by the end of this year and fall below 2% beyond 2029. Meanwhile, rents are forecast to increase 4.8% this year.
Read also: Selective investing is key as real estate opportunities abound: market outlook forum
In any case, Singapore’s position as a hub for technology, professional services and other knowledge-intensive businesses gives it an advantage as AI adoption accelerates, said Natalie Craig, chief executive of Cushman & Wakefield Singapore.
“As businesses rethink how and where their people work, we expect demand to become more selective, thereby putting an even greater premium on quality, connectivity and adaptability,” she added.