What Happened?
Singapore’s office market continued to tell a two-speed story in Q3 2025.
According to the latest URA statistics, rents in Category 1 office buildings located in prime business districts with large floorplates and modern facilities, rose by 2.5% quarter-on-quarter.
In contrast, Category 2 offices which include older or less central buildings stayed flat at 0.0%.
Private consultancies echoed the same theme, though with slightly smaller numbers.
JLL reported that CBD Grade A office rents climbed 1.3% q-o-q to S$11.83 psf/month, while CBRE estimated a 0.8% q-o-q rise to S$12.20 psf/month for Core CBD Grade A space.
In other words, the top-tier segment is inching up, but the rest of the market remains in wait-and-see mode.
👉 Rozi’s Field Notes:
When data starts to diverge like this, definitions matter. URA’s “Category 1” isn’t identical to “Grade A” but both point to one thing: the best spaces are holding their ground. It’s a quiet reminder that quality, location, and age still carry a premium even when the broader market takes a breather.
Why It Matters
This gap between premium and secondary space is widening.
URA’s figures show that vacancy in Category 1 offices fell from 11.0% to 9.9% in Q3, while overall island-wide office vacancy eased to 11.2%.
The takeaway? A “flight to quality” is underway. Tenants are gravitating toward newer, greener, better-connected buildings even if that means paying a little more. For landlords, this resilience at the top could mean firmer yields and stronger valuations; for occupiers, it might mean a more competitive leasing landscape if you’re eyeing prime addresses.
👉 Rozi’s Field Notes:
Whenever the market gets selective, investors should get strategic. Owners of older stock might consider refurbishment or repositioning to stay relevant, while tenants could lock in leases before rents creep further. The fundamentals are shifting but selectively, not universally.
The Forces Behind the Numbers
Three main factors stand out this quarter:
- Tightening Supply:
Net office space shrank by about 0.26 million sq ft in Q3, reducing available options. - Quality Demand:
Tenants prioritise wellness design, sustainability features, and flexible floorplates. This appetite for quality is lifting effective rents for top buildings. - Macro Sentiment:
With interest rates edging down and the economy showing modest recovery, occupiers are regaining confidence to renew or expand especially in higher-grade spaces.
👉 Rozi’s Field Notes:
The “flight to quality” isn’t just a catchy phrase. It reflects a deeper reset after years of hybrid-work uncertainty. Companies that now want to bring staff back are using the office as a brand statement and that’s good news for developers who built with foresight.
What About the Rest of the Market?
Outside the CBD and among lower-grade stock, rental growth is nearly flat.
Older buildings are still facing competition, with some landlords offering incentives or flexible terms to retain tenants.
That’s creating a two-tier market: premium offices are experiencing mild rent growth and tightening vacancies, while older stock sits in limbo, neither crashing nor recovering.
👉 Rozi’s Field Notes:
If you’re a landlord with an ageing asset, this lull is the best time to refresh or retrofit. If you’re a tenant, it’s a golden window to negotiate better terms. Markets like these quietly reward those who act before sentiment shifts.
Looking Ahead
Analysts expect the rental gap between prime and secondary offices to persist into 2026, unless a major wave of new supply enters the pipeline. As of now, the limited upcoming stock suggests more of the same: steady demand at the top, subdued movement elsewhere.
👉 Rozi’s Field Notes:
This is where property cycles speak softly but clearly. Premium space will likely continue to command attention and rent growth. The rest of the market? It might need a makeover before momentum returns.