Offices get pricier to rent and buy in 2Q2026, pipeline supply dwindles

Rents and prices of office space in Singapore both rose on a q-o-q basis in the second quarter of this year, according to URA’s latest quarterly real estate statistics released on July 24.

That said, vacancy rates inched up by 0.2 percentage point, reversing the drop of 0.3 percentage point in the first quarter. The upcoming supply of offices also shrank.

Overview of office space 2Q2026 real estate statistics:

Higher rents led by newer Grade A assets

Rentals of office space in the Central Region of Singapore increased by 0.8% q-o-q, versus the 0.2% decline in 1Q2026, the URA data showed.

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This came amid structurally tight supply and resilient occupier demand in the overall leasing market, which made the environment favourable to landlords, particularly within the core CBD Grade A segment, Colliers noted.

The firm’s figures for the second quarter showed that CBD Grade A/premium rents grew by 1.9% q-o-q — stronger than expected — due to tight supply.

Rental growth has been led by premium, newer Grade A assets, where sustained demand and a limited near-term development pipeline continue to compress vacancy and exert upward pressure on rents.

Occupiers are also adopting a more proactive and forward-looking approach to portfolio planning. Pre-commitment activity is already emerging for developments slated for completion beyond 2028, commented Catherine He, head of research at Colliers.

Demand remains anchored by financial institutions, wealth management platforms, and investment firms. AI firms are also a growing source of incremental demand, as they graduate from co-working environments into dedicated office spaces while scaling up their regional operations.

At the same time, flexible workspace operators continue to expand. They cater to start-ups and new market entrants while serving as “a feeder channel for future conventional leasing demand,” said He.

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Colliers raised its rental growth forecast, now projecting average prime Grade A and premium office rents to rise by about 4% to 6% this year.

Leonard Tay, head of research at Knight Frank Singapore, likewise observed that companies on a growth path and need to expand have been drawn to well-located, newer Grade A buildings in the CBD.

“As such, less competitive older buildings, particularly those without sheltered connectivity to mass transit nodes in Singapore’s tropical climate or with weaker or obsolete specifications, face increased vacancy risks and mounting downward pressure on rents,” Tay added.

CBRE pointed out that among Category 1 office spaces, median rents for those larger than 10 sq m rose by between 4.4% and 12.4% y-o-y in the second quarter of 2026 (see table below).

Large-format floor plates of 500 sq m to 1,000 sq m recorded the strongest gain, increasing by 12.4% y-o-y to a median of $12.70 psf per month.

Median rentals for Category 1 office space ($ psf per month):

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Note: Refers to office space in buildings located in core business areas in Downtown Core and Orchard Planning Area which are relatively modern or recently refurbished, command relatively high rentals and have large floor plate size and gross floor area. Source: URA, CBRE Research.

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Across key assets in the core CBD area, the flight-to-quality momentum was evident, said Tricia Song, CBRE head of research, Singapore and Southeast Asia.

IOI Central Boulevard Towers, Marina One, and Marina Bay Financial Centre remained focal points of active leasing activity, anchored by tenants seeking large, contiguous floor plates of international specifications, Song added.

Sustained investor appetite for trophy assets

Prices of office space in the Central Region went up by 0.4% q-o-q in 2Q2026, speeding up slightly from the 0.2% increase in the previous quarter.

Newmark senior managing director and head of Singapore leasing, June Chua, said that quality strata office assets continued to appeal to investors.

"The limited supply of assets for sale continues to support price growth, while the absence of ABSD on commercial strata offices makes them particularly attractive for foreign investors seeking to deploy capital into Singapore," Chua added.

Cushman & Wakefield (C&W) noted that strata office transaction activity in the Central Region rose slightly to 65 transactions in the latest quarter, up from 63 in the first quarter, based on caveat data. On a y-o-y basis, this is still lower than the 93 transactions in 2Q2025.

"That said, the demand for and pricing of prime strata office asset should remain well-supported by limited available supply, a still-favourable interest rate environment, and Singapore’s appeal as a regional safe-haven market," added Wong Xian Yang, head of research for Singapore and Southeast Asia at C&W.

In the office investment sales market, the transaction of Asia Square Tower 2, alongside the recent launch of Hongkong Land’s Singapore Central Private Real Estate Fund (SCPREF) targeting prime commercial assets, "underscores the continued depth" of institutional capital targeting the prime office segment in Singapore, said He from Colliers.

The Asia Square Tower 2 integrated development was acquired by IOI Properties Group for about $2.48 billion, or around $3,200 psf, in April.

Such deals reflect strong investor conviction in the long-term fundamentals of the market, especially for well-located, high-specification assets within the CBD. In He's view, they could further boost office prices in Singapore.

"Notably, the pricing achieved highlights investors' willingness to pay for scale, asset quality, and income resilience, even amid global uncertainty," she added.

The sustained appetite for such trophy assets signals confidence in Singapore's safe-haven status and the durability of demand for premium office space, Colliers noted.

Knight Frank’s Tay said: "Although global instability compelled office users to tread cautiously, the same uncertainty also bolstered Singapore’s position as a safe-haven business hub." This supported longer-term interest from multinational occupiers seeking a stable regional base away from conflict zones.

Investors are cognisant of Singapore’s stability and have been active in acquiring office buildings in the first half of 2026 for the asset type’s steady recurring income, Tay shared.

More stock available, more vacant units

URA statistics showed that the islandwide vacancy rate increased to 11% as at the end of the latest quarter, from 10.8% in 1Q2026. This came as available stock outpaced the amount of occupied space.

The stock of available completed office space climbed by 19,000 sq m (204,514 sq ft) in the second quarter, accelerating from the increase of 8,000 sq m in the previous quarter.

At the same time, the amount of occupied office space increased by 8,000 sq m — slower than the jump of 26,000 sq m in 1Q2026.

Vacant units totalled some 898,000 sq m, which is 1.2% more than the 887,000 sq m in the first quarter of this year.

Tay from Knight Frank said that despite the slight dip in occupancy levels, the growing office rental index reflected the “continued firm and stable demand” by occupiers.

Colliers’ He highlighted that newly completed projects have seen “strong take-up and are filing up quickly”.

This coincided with increasingly flexible leasing structures islandwide, as landlords offer fit-out contributions and capex incentives — typically amortised into headline rents — to attract and retain tenants amid high fit-out costs, she added.

C&W noted in a July 23 report that the vacancy rate of Grade A office space in the CBD rose to 4.7%, up from 4.3% in the first quarter, following the completion of Shaw Tower.

"Strong take-up at this new development lifted CBD Grade A net demand to 0.3 million sq ft in the quarter, up from 0.05 million sq ft in 1Q2026," wrote C&W.

Islandwide, office net demand remained positive and reached 0.1 million sq ft, easing from 0.2 million sq ft in the earlier quarter.

This was driven mainly by positive net demand in the Outside Central Region (+86,000 sq ft), Downtown Core (+54,000 sq ft), Orchard (+32,000 sq ft) and the rest of Central (+32,000 sq ft).

However, it was offset by negative net demand of -118,000 sq ft in the Fringe Area, said C&W's Wong.

Less supply in the pipeline

Supply in the pipeline — comprising new developments and redevelopment projects with planning approvals — as at the end of the second quarter of this year totalled about 848,000 sq m in gross floor area (GFA) of office space. That is down by 2.2% from the first quarter’s 867,000 sq m GFA.

About 24,000 sq m of the upcoming supply is slated for completion by the end of 2026, while 66,000 sq m is expected to come on stream by 2027, according to the latest URA data.

Pipeline supply of office space:

In its report, C&W noted that tight supply is set to persist as there are no major office completions in the second half of this year, and only Newport Tower — with 0.2 million sq ft of net lettable area — is expected in 2027.

"This is likely to push vacancy down to under 4% by end-2026,” its research team said of the CBD Grade A segment. “New CBD Grade A office supply is expected to remain below historical net demand for most years through 2031."

Song from CBRE observed that the scarcity of large contiguous floor plates exceeding 20,000 sq ft is prompting occupiers to "act well ahead of their lease expiries".

There is already pre-commitment activity for developments that are completing as far out as 2029, she noted.