Bookmark & Share
Singapore’s office leasing market last year was mainly driven by relocations rather than the need to occupy more space, according to Cushman & Wakefield’s Director and Head of Research Christine Li.
In a report, Cushman & Wakefield said 62 percent of all office spaces measuring at least 25,000 sq ft that were rented out in 2014 involved relocations, as tenants gravitated towards cost-effective and premium-quality buildings. Lease renewals made up another 23 percent, while new leases accounted for the remaining 15 percent.
Of the leasing agreements involving relocations, 15—amounting to around 735,000 sq ft—were classified as “flight to quality” transactions, wherein tenants shifted to newer buildings with better specifications.
“These account for about 71 percent of the total relocation leasing spaces last year, resulting in healthy take-up rates for newly completed office buildings such as CapitaGreen on Market Street and South Beach on Beach Road,” she said.
The former is believed to have leased out nearly 70 percent of its net lettable area (NLA), while South Beach is understood to have achieved an occupancy rate of 80 percent.
Looking ahead, Li projected that office rents would rise by 5 to 6 percent in 2015.
Although there are no major office completions expected for the remainder of this year, approximately four million sq ft of new office spaces are forecasted to enter the market in 2016 from DUO Tower at Bugis, Marina One in Marina Bay and Guoco Tower at Tanjong Pagar.
In particular, Marina One will likely attract many corporate tenants thanks to its highly efficient floor plates and prime location in the heart of the new downtown. As for DUO Tower, it could appeal to a more diversified profile of tenants as it is outside the Central Business District (CBD) Electronic Road Pricing gantry.
Meanwhile, the winning bidder for a 98ha commercial site with direct links to Paya Lebar MRT Interchange is set to be announced at the end of March. At least ten bidders are expected to take part in the tender process, while the top offer price could reach the higher end of S$850 to S$950 per sq ft per plot ratio. The 3.98ha site at Paya Lebar Central is intended for a mixed-use project with a gross floor area of 1.78 million sq ft.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
Related Articles:
S'pore property buying intentions remain strong