Reinventing Cbd What Singapore Can Learn Paris New York And Tokyo
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The CBD Incentive (CBDI) Scheme in Singapore, which was first introduced in 2019 and has recently been extended until 2030 under CBDI 2.0, is more than just a policy for landlords. This program has the potential to be a game changer for occupiers, as it will redefine their future in the city centre.
The vision of the scheme is to transform the CBD into a lively mixed-use precinct that combines commercial activity with residential and lifestyle amenities. This will encourage owners to replace older office buildings with integrated developments that promote live-work communities and improve connectivity.
According to JLL Research, the scheme affects 16% of the total office inventory in the CBD, with over 25 buildings comprising approximately 6.4 million sq ft qualifying under its framework. This has resulted in significant interest from business leaders, who are now looking for ways to navigate this change.
For occupiers, the key to navigating this transformation lies in understanding the ripple effects it creates. To gain a better understanding, we can look at the experiences of other world-class cities that have undergone similar urban renewal projects. This will help us turn this potential disruption into a strategic advantage.
One of the main consequences of the CBDI Scheme is the temporary removal of approximately 1.7 million sq ft of office space, as many owners are leveraging the scheme for redevelopment. This will be followed by a permanent reduction in pure office space, as the redeveloped assets are expected to offer approximately 20% less office area to accommodate their new mixed-use focus. This predictable tightening of supply will accelerate the ‘flight to quality’ and lead to higher rents in the CBD.
This creates a trilemma for occupiers in older buildings. They can either accept higher rents, move to another ageing asset and postpone the inevitable, or relocate out of the CBD. However, the affordability of these older buildings, which have an average rent of $7.29 per sq ft, comes with a hidden risk. Many occupiers may be forced to move, but this can also present a rare opportunity to ‘right-size’ and escape the constraints of an outdated layout.
This combination of constrained supply, escalating costs, and strategic trade-offs will alter the decision-making process for every occupier. The simple question of ‘cost per square foot’ will now be replaced by a more complex equation that considers factors such as redevelopment risk, business continuity, and brand positioning. To navigate this new reality, occupiers will need to have a fresh perspective, which can be gained by examining the global stage.
Looking at how similar urban renewal programs have reshaped other global hubs, occupiers in Singapore can anticipate what lies ahead. For instance, the systematic renewal of Paris’s La Défense district highlights the impact of a rising tide on all buildings in the area. Before its renewal, La Défense was a first-generation business district facing obsolescence. The renewal plan focused on sustainability, making it the world’s first “post-carbon” business district. This meant that new buildings became showcases for ESG excellence, forcing existing tenants to evaluate their own environmental credentials to remain competitive.
The lesson here is that a revitalized CBD will set a new baseline, especially for non-negotiables like sustainability. This will compel occupiers to question if their current workspace attracts talent and aligns with their corporate values, or if it suggests that their company is behind the curve.
Similarly, the rezoning of New York’s East Midtown enabled developers to purchase unused “air rights” from landmarks to build taller towers, like One Vanderbilt. In exchange for this added density, these developers were required to fund major public infrastructure improvements, such as upgrading the subway system. This created two distinct tiers of office accommodation, with newer buildings offering advanced technology and a visible commitment to civic betterment. This forced companies to choose which tier aligns with their identity.
The lesson here is that the gap between old and new becomes a chasm, separating the market into distinct classes of prestige and functionality. This will have an impact on the positioning and branding of occupiers, who will need to carefully consider the message their office space sends to clients, partners, and potential investors.
Finally, Tokyo’s approach in districts like Marunouchi highlights that urban renewal is a continuous process. Its legislative framework creates “Special Urgent Urban Renaissance Areas”, which encourages perpetual evolution. This creates an environment where tenants are not just leasing space, but participating in a dynamic ecosystem. The expectation of excellence is continuous, forcing businesses to assess if their strategy is agile enough to adapt to a perpetually evolving urban landscape.
The winners in this new landscape will be those who view real estate as a dynamic asset that must evolve with their business. This will require a series of fundamental conversations at the board level, including discussions about timing, vision and brand, talent and culture, and risk and resilience.
For occupiers with a lease expiring in the next 18-24 months, planning for the future now is crucial. Those with longer leases will need to scrutinize their redevelopment clauses and notice periods to ensure they have the best options available. Waiting for a landlord’s notice will erode leverage and limit options in a market where supply is tight.
In this revitalized CBD, the workspace will be more than just a cost – it will be a powerful, tangible statement of a company’s ambition. Companies will need to consider if their office space reflects a forward-looking vision or anchors them to the past. In a competitive talent market, the office must be a destination, one that fosters collaboration, creativity, and connection. This means that companies occupying older assets will need to justify the commute with a workspace that offers more than just space.
Lastly, occupiers will need to have discussions about risk and resilience. A short-term lease in a building marked for future redevelopment is a high-risk position that exposes businesses to significant disruption and unexpected costs. This conversation goes beyond lease terms – it is about ensuring business continuity and building a resilient operational footprint for the long term.
In conclusion, in a city designed for perpetual evolution, the greatest risk is not choosing the wrong building – it’s standing still. By understanding the global playbook, occupiers can anticipate the changes and challenges that lie ahead and plan accordingly. This will help them turn this potential disruption into a strategic advantage and emerge as winners in the new CBD landscape.
