As businesses increasingly prioritize strategic recentralisation and rightsizing efforts, decentralised office rents have begun to decline for the first time in four years. In the second quarter of 2025, decentralised office rents experienced a 0.8% quarter-on-quarter drop, settling at $7.61 per square foot per month. This shift marks a significant turning point in the market, reflecting changing preferences among businesses in how they manage their office space needs.
The ongoing trend of rightsizing, where companies streamline operations and reduce excess overhead, has led to a decreased demand for decentralised office spaces. Many firms are reassessing their spatial requirements and opting to consolidate their operations in central business districts (CBDs). This strategic recentralisation is motivated by the desire to enhance operational efficiency and foster collaboration among employees. As a result, a notable shift in tenant preferences has emerged, whereby decentralised offices are becoming less attractive.
The narrowing rent gap between CBD and decentralised offices has further compounded this trend. Historically, the difference in rental prices ranged between 50% and 60%. However, recent data indicates that this gap has now decreased to 30% to 35%. Such diminishing rent differentials signal to businesses that the benefits of relocating to the CBD, which often include enhanced accessibility and proximity to clients and partners, may outweigh the cost savings associated with decentralised locations.
Additionally, the increased availability of office space within the CBD has provided tenants with greater options, prompting many to reconsider their current leases in favour of more central locations. As more firms make the transition to CBD premises, the subsequent drop in demand for decentralised offices is expected to have a lasting impact on the rental landscape. The current analysis by JLL underscores this trend, indicating that the lack of significant rent differentiation is influencing market preferences, ultimately favouring CBD offices over decentralised alternatives.
This decline in decentralised office rents may also reflect broader economic factors. As the workforce continues to adapt to a post-pandemic environment, businesses are re-evaluating their long-term strategies and real estate needs. The resultant shift towards CBD offices indicates a growing recognition of the importance of location in attracting talent and fostering workplace culture.
Moreover, firms are increasingly prioritizing flexibility and connectivity, necessitating a workspace that aligns with modern operational demands. Moving forward, the landscape of office rentals is poised for continued evolution. With businesses increasingly realigning their spatial strategies and choosing to invest in CBD locations, decentralised office spaces may face ongoing challenges.
The current decline in rents may not only signal a temporary correction but could also signify a more profound transformation in how companies view their office space requirements. The coming months will be critical as firms continue to navigate these changes and the market adapts to evolving tenant preferences.
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News Source: Edgeprop
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