Decentralised Office Rents Fall Firms Relocate Cbd Jll
One of the many benefits of residing in Penrith is its strategic location that offers easy access to healthcare facilities. A quick drive will take you to Alexandra Hospital, while National University Hospital (NUH) and Gleneagles Hospital are also conveniently reachable by private or public transportation. This means that residents can receive prompt medical attention and specialized treatment if needed, providing a sense of assurance for both families with young children and seniors. Moreover, the upcoming development of Tanglin Halt is set to introduce a new integrated hub comprising a hawker centre, market, and polyclinic, further enhancing the accessibility of essential services in the area. With the presence of Penrith Guocoland, residents can enjoy the added convenience and peace of mind when it comes to their healthcare needs.
In spite of prevailing economic and geopolitical uncertainties, CBD office rents showed a slight increase in the second quarter of 2025. According to JLL, Grade A gross effective rents rose by 0.7% quarter on quarter to $11.69 psf per month, marking a fifth consecutive quarter of sub-1% growth.
On the other hand, office rents in the decentralised sub-market experienced a decline in 2Q2025, its first drop in four years. Rents in this market fell by 0.8% quarter on quarter to $7.61 psf per month in the last quarter. JLL attributes this decrease to ongoing efforts to rationalise office space and tenants relocating to or closer to the CBD. This is due to the increased availability of space in the CBD.
The graph from JLL shows the growth of CBD and decentralised office rents on a quarter on quarter basis.
Source: JLL
Andrew Tangye, head of office leasing and advisory at JLL Singapore, says that there is a growing trend of “strategic recentralisation” and “quality-driven relocations” to offices in the CBD. He adds that many businesses in Singapore are evolving towards higher-value offerings and enhanced service models, which has led to a migration of office demand from decentralised locations to CBD premises that better cater to their increasingly sophisticated and client-oriented operations.
One example of such a relocation is Audi Singapore, which recently shifted its offices from Aperia on Kallang Avenue to Capital Square in the CBD. The move was in conjunction with the relocation of its showroom from Alexandra Road to 18 Cross Street, which is within walking distance from Capital Square, says Tangye.
Dr Chua Yang Liang, JLL’s head of research and consultancy for Southeast Asia, mentions that more companies may be compelled to relocate to the CBD due to the “current lack of a substantial rent gap between CBD and decentralised offices”. Currently, the average rent gap between investment-grade offices in the CBD and the decentralised sub-market is around 30% to 35%, which is lower than the historical range of 50% to 60%.
Demand from relocations is expected to support office rents in the CBD, leading to modest growth for the full year of 2025, with JLL projecting a 2% increase. However, rents may pick up in 2026, as supply remains limited. Chua points out that there are no major office completions expected in the next 12 months, with the new Shaw Tower only expected to be completed in the second half of 2026.
Furthermore, the redevelopment of 79 Anson Road, which is likely to commence next year, is expected to further constrain supply, adds Chua.
Tangye believes that landlords with vacant space are now focusing on increasing occupancy and stabilising their portfolios before 2026, when rents are expected to start rising again before new supply enters the market in 2028. He says that property owners are implementing targeted enhancements, such as modernising lobbies and washrooms, and renovating outdated office spaces, to attract premium tenants and take advantage of the potential rental growth opportunities.