The Market Move

Grade A office rents in Singapore's Central Business District climbed 1.4% quarter-on-quarter in Q1 2026, reaching an average of S$11.85 per square foot per month, according to Cushman & Wakefield's latest Marketbeat report. The uptick marks the third consecutive quarter of rental growth, driven by a tightening supply pipeline and persistent demand from financial services, technology, and professional services firms seeking premium workspace. Vacancy rates in the CBD's Grade A segment compressed to 4.1%, down from 4.6% in Q4 2025 and well below the ten-year average of approximately 5.8%. The combination of limited new completions and steady tenant absorption has shifted pricing power firmly toward landlords.

  • Q1 2026 Grade A CBD Rent: S$11.85 psf/month
  • QoQ Rental Growth: +1.4%
  • CBD Grade A Vacancy Rate: 4.1%
  • Q4 2025 Vacancy Rate: 4.6%
  • Net Absorption (Q1 2026): ~320,000 sq ft

Supply Constraints Tighten the Market

The rental acceleration reflects a structural supply gap that has been building since 2024. Only one major Grade A tower — IOI Central Boulevard Towers — was completed in the CBD over the past twelve months, and no significant new office stock is scheduled for delivery until late 2027 at the earliest. Cushman & Wakefield noted that pre-commitment rates for upcoming projects have already reached 60–70%, further limiting options for tenants with large space requirements. Refurbishment and asset enhancement works at several older buildings along Shenton Way and Robinson Road have also temporarily removed leasable stock from the market, adding to the squeeze. The firm estimates that available Grade A CBD space has fallen below 2.8 million square feet, the lowest level since Q2 2019.

Flight-to-Quality Demand Remains Robust

Demand for premium office space continues to outpace supply, with occupiers prioritising buildings that offer strong ESG credentials, modern specifications, and proximity to transport nodes. Financial institutions accounted for roughly 35% of new leasing activity during the quarter, followed by technology firms at 22% and legal and consulting practices at 15%. Several multinational corporations reportedly consolidated from multiple older premises into single-floor plates in newer Grade A towers, a pattern that Cushman & Wakefield described as a sustained flight-to-quality trend. Notably, tenants have shown willingness to accept rental premiums of 8–12% over comparable older stock in exchange for green-certified buildings with superior air quality systems and flexible floor configurations.

Rental Divergence Across Micro-Markets

Performance within the CBD was not uniform. The Marina Bay and Raffles Place micro-markets recorded the strongest rental growth, with select buildings achieving rents above S$13.00 psf per month for high-floor units with unobstructed views. By contrast, older Grade A properties along Shenton Way and Cecil Street saw more modest growth of 0.6–0.9%, reflecting tenant preferences for newer specifications. This widening rental gap between prime and secondary Grade A stock underscores the importance of asset quality in the current cycle. Landlords of older buildings face increasing pressure to invest in capital upgrades or risk losing tenants to competing developments offering better sustainability metrics and amenities.

What This Means for Investors

The tightening vacancy environment and constrained supply pipeline suggest that CBD Grade A rents have further room to rise through 2026. Cushman & Wakefield projects full-year rental growth of 3–5%, which would push average rents toward the S$12.20–S$12.40 psf range by year-end. For investors, the compression in vacancy rates points to improving net operating income across well-positioned Grade A assets, with capitalisation rates for prime CBD offices currently sitting at 3.1–3.3%. However, the limited availability of investable stock means transaction volumes may remain subdued despite strong underlying fundamentals. Tenants with leases expiring in the next 12–18 months should expect reduced negotiating leverage and are advised to begin renewal discussions early to secure competitive terms before further rental escalation.