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Commentary: Singapore’s CBD needs to redevelop to stay relevant in a post-COVID world

Forced to work from home over the past few months, companies and organisations are set to embrace remote work as a permanent management strategy for some functions within organisations. COVID-19 has demonstrated that for many companies, working from home can be almost as productive as being in the office, especially carrying out operational functions. It is now viewed as being a prudent way of mitigating risks and ensuring business continuity even after the pandemic ends.

Many CBD office workers, liberated from the long commute times to and from the city centre, suddenly discovered that the flexible work schedules have enabled them to unlock precious hours to spend on family and new hobbies.

With ever improving technology and most companies going paperless, working from home could potentially be adopted for an average of 30 per cent of typical office functions, according to Showsuite Consultancy’s assessment.

So what does that mean for the Central Business District? Is it still relevant, and if so, what changes could be expected? Let us first study the likely impact on CBD office rents. 


As an aggregate, occupier demand for business space is expected to weaken in the short-term due to a combination of factors – the current weak economy, the increased risk of business closures and the sustained adoption of remote work arrangements.

Some organisations may find it more economical to downsize their physical premises to reduce operating costs, or even surrender it entirely in favour of flexible work arrangements. Already, an increasing number of companies are adopting hot desking practices, staggering their workforce into separate teams, or moving into co-working spaces and serviced offices. 

High density and high-rise buildings would face practical bottlenecks and inconveniences in the lobbies, lifts and food and beverage areas, if safe distancing measures continue to be in force.

However, on the flip side, office space planning would now require more floor area per staff than before, with the floor area to employee ratio expected to increase by 20 per cent due to safe distancing measures. 

So in other words, if companies had catered 10 sqm of floor space per staff for space planning purposes, this would likely rise to 12 sqm or so in order to spread out the work tables, or have less staff work from the office.

Singapore office rents have eased due to the challenging business environment but are largely expected to remain stable, at least for the time being. At the end of the second quarter of this year, vacancy rates of office space in the Downtown Core have risen by a marginal 1.4 per cent - from 9.3 per cent in the fourth quarter of 2019 and first quarter of 2020 to 10.7 per cent.

Mitigating the downside are four factors. Firstly, the higher space to worker ratio which means that companies still demand a large enough space to operate from.

Secondly, the limited supply of new CBD offices completing over the next one to two years, which prevents a supply glut from increasing vacancy rates.

Third, more than one million sq ft of office space have been or is due to be withdrawn for redevelopment, further reducing supply. These comprise of space from AXA Tower, Fuji Xerox Towers and Tower Fifteen. 

Lastly, while office rental rates had strengthened in the preceding two years prior to COVID-19, they are nowhere near lofty territory, suggesting that any drop in rentals may not be dramatic.

So the net effect of the two conflicting sets of factors would still inevitably spell challenges for the CBD office rental market in general in the short term. 

Notably, lease renewals are taking place at 5 per cent to 10 per cent lower in most office buildings, with the exception of premier grade CBD offices, which still commands a premium.


The working population in the Downtown Core area is estimated to be over 400,000. If 30 per cent of them were to work from home permanently or semi-permanently, that would mean some 120,000 fewer workers commuting into the city on a regular basis.

This would, undoubtedly, spell a drop in business for supporting food and retail outlets in the CBD but a relief from a town planner’s perspective. Commercial activities can be decentralised, and the strain and congestion on public infrastructure during peak hours can be greatly alleviated.

For years, the government has encouraged offices to move into decentralised locations and for stakeholders to redevelop old office buildings into non-office uses. The latest CBD Incentive Scheme announced last year offered higher plot ratios to encourage the conversion of existing office blocks to mixed-use buildings with predominant hotel or residential uses.

There are two main objectives in doing so – to inject life and vibrancy into the CBD during non-work hours in the evenings and weekends while gradually widening the gap in rents between prime and suburban workspace so as to improve the economics of decentralised offices.

If occupier demand for office spaces weakens, we may see more building owners bringing forward redevelopment plans for their properties.

With tourism and business travel disrupted by recent travel restrictions, the feasibility of building more CBD hotels at this juncture may need to be re-examined as the road to recovery is expected to be long. 

On the other hand, although the residential property market has remained relatively resilient in general, the concept of inner-city living has failed to gain large-scale traction over the years, particularly due to its limited appeal.

Residences located in the CBD cater to an affluent, but transient, category of residents such as investors, foreigners, expatriates, singles and young couples. Families, in particular those with children, tend to prefer locations outside the Downtown Core, where they can tap on supporting services such as schools, childcare centres, healthcare providers, supermarkets and recreational facilities – which are lacking in the CBD.

A thriving business and financial centre is integral to any developed country. It is therefore important to regularly rejuvenate the landscape of the CBD whilst improving efficiency. The current slowdown in the economy presents an opportune time for owners of neighbouring small, old buildings to band together and redevelop them into brand new offices that offer larger floor plates for better space planning and with smarter building specifications. 

Doing so now, when business activity is low, may place them in a favourable position to coincide the completion of the new building with the eventual economic recovery. 

The planning authorities could help facilitate this by offering similar time-limited incentives for selected office development proposals.

In the meantime, it would be worthwhile to pause and rethink development plans for the Jurong Lake District, the second CBD, till new work cultures evolve and take root. Irrespective, unlike the main CBD, the Jurong Lake District has the unique prospect of experimenting with new age business buildings side by side with homes.


While flexible work arrangements are here to stay, the CBD and CBD offices will continue to remain relevant. Even with continued remote work, companies are likely to retain a head office in a central location while back-office functions could be carried out from homes or from branch offices located away from the city.  

Offices continue to play an irreplaceable role in facilitating face-to-face interactions which are essential in building relationships, trust and fostering collaboration. Countless new ideas and innovations have been birthed by impromptu team discussions over coffee – something that a scheduled Zoom meeting is unable to substitute.

With this is mind, workspaces and head offices would need to be redesigned to function differently from the traditional business space. It can no longer be a mere space for work desks, cubicles and meeting rooms. Instead it would need to evolve into a destination for employees to meet, learn, brainstorm, interact and collaborate.

Featured on ChannelNewsAsia on 25 August 2020


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