Vacancy crunch at 2.6% sends Grade A office rents to post-2022 peak

No new supply before 2028 as AI and financial firms compete for dwindling Grade A space.

Singapore’s Core CBD office market is heading for its strongest rental year since 2022, as a deepening supply squeeze pushes rents higher across the board.

“With secondary space continuing to shrink, no meaningful supply relief expected before 2028, and occupier demand remaining resilient across multiple sectors, the conditions supporting rental growth remain intact,” CBRE Research said in its latest analysis.

CBRE data showed Core CBD (Grade A) rents rose 2.0% quarter-on-quarter (QoQ) to $12.75 per square foot (sq. ft.) per month in the third quarter (Q3), marking the strongest quarterly increase since Q3 2022, when rents grew 2.7% QoQ on a post-pandemic cyclical recovery.

Core CBD (Grade A) vacancy also fell to 2.6% in Q3 from 3.3% in the second quarter (Q2), supported by healthy net absorption and continued occupier expansion activity.

Year-to-date, CBRE said rental growth settled at 3.7%, with the pace accelerating in the second half. It expects full-year Core CBD Grade A rental growth to exceed 5% in 2026, the strongest annual performance since 2022’s 8.3%.

The tight leasing conditions have also strengthened office investment sentiment, with investors drawn to the sector’s rental growth prospects, improving occupancy, and income resilience. Prime office assets remain among the most sought-after in Singapore’s commercial real estate market.

“With very limited new supply before 2028 and vacancy already near frictional levels, occupiers are competing for a shrinking pool of quality space,” said Tricia Song, head of research, Singapore and Southeast Asia at CBRE.

“Unless economic conditions deteriorate materially, the balance of power is likely to remain with landlords,” Song said.

Colliers, meanwhile, reported that Core CBD Premium and Grade A office rents rose 5.3% in the first nine months of 2026, approaching the upper end of its 4% to 6% full-year forecast. Vacancy is expected to remain low until 2028, when The Clifford, The Skywaters, and One Comcentre are scheduled to deliver substantial new supply to the market.

Specifically in Q3, rents increased 1.8% to $12.45 per sq. ft., broadly matching the previous quarter’s pace. Net absorption rebounded to 419,000 sq. ft. from negative 172,000 sq. ft. in Q2, taking vacancy down to 2.7% from 3.3%. Technology and non-bank financial firms anchored demand, even as occupiers remained measured in their expansion plans.

“The key consideration is whether demand continues to absorb the limited space available. Occupiers can remain cautious about expansion whilst still competing for the same small pool of suitable premises,” said Catherine He, head of research at Colliers Singapore.