CBD Grade A office vacancy falls to six-year low as take-up slows

Rents rose for a 10th straight quarter to a record $10.56 per sq ft.

Grade A office vacancy in the central business district (CBD) fell to a six-year low of 4.9% in the third quarter (Q3) of 2026, according to Savills Singapore.

Vacancy declined for the fourth consecutive quarter, falling 0.7 percentage points quarter-on-quarter (QoQ) from 5.6%. It last stood lower in Q1 2020, at 4.3%.

Net absorption, however, fell 23% year-on-year to 658,000 square feet (sq ft) in the first nine months of 2026, from 853,000 sq ft.

Savills said the lower take-up may not be solely due to weaker occupier demand, as the limited supply of suitable office space could also be constraining leasing activity.

Premium space remained the tightest. Grade AAA vacancy fell for a seventh straight quarter to 2.2% from 3.1%, its lowest since Q1 2011 and well below the historical average of 6.4% between 2016 and 2025.

Grade AA vacancy also fell 1.0 percentage point to 7.5% from 8.5%, the lowest since Q2 2025.

Meanwhile, average CBD Grade A office rents rose for the 10th consecutive quarter, up 1.4% QoQ to a record $10.56 per sq ft.

"The continued increase in office rents has been driven primarily by limited supply rather than a significant rise in demand," said Alan Cheong, executive director of research and consultancy at Savills Singapore.

"With fewer suitable spaces available, it is becoming increasingly difficult to gauge the full extent of occupier demand, as some requirements may not translate into actual take-up," he added.

The firm expects rents to rise by around 5% this year and by a further 5% to 7% in 2027.

Supply is expected to be even lower in 2027, with Newport Tower the only Grade A CBD office development scheduled for completion.