RENTS STEADY AMIDST LOWER VACANCIES
CBD Grade A office rents continued to rise 0.5% qoq in Q3 2025, driven largely by tighter supply as vacancy tightened to 4.7% from 5.2% in Q2. Faced with CapEx constraints, many occupiers have continued to favour renewals rather than relocations. Amid constrained availability and CapEx pressures, firms have been turning to flexible solutions such as short-term leases or plug-and-play fitted-out offices, which often carry higher rates.
We remain optimistic that relocation activity will pick up over the next 12 months, supported by rising occupier confidence. This momentum is expected to be driven by a continued flight to quality, as well as displacement demand stemming from office redevelopments. CBD Grade A office net absorption remained healthy at 197,000 sf in Q3, following 185,000 sf in Q2. Decentralised all-grades office rents inched up just 0.1% qoq in Q3 2025 despite vacancy falling to 5.3% from 7.2%. With vacancies easing, decentralised office rents are expected to grow at a faster rate.
TIGHT SUPPLY CONDITIONS
Rents for CBD Grade A offices are expected to rise into 2026 as flight to quality persists and supply tightens further. New CBD Grade A office supply over 2026-2027 will total about 0.6 million sf (msf), limited to the expected completions of Shaw Tower in mid-2026 and Newport Tower in 2027, with roughly 22% of this total already under offer. This total supply translates to an annual average of 0.3 msf, only around one-third of historical net demand. Meanwhile, CBD Grade A shadow office space declined to 93,000 sf in Q3 2025, a nine-year low, reinforcing the scarcity of quality office space.
