Bookmark & Share
Vacancy rates in the republic’s business parks showed a positive results in the first quarter (Q1) of 2015, posting some 12 percent decline from 11.7 percent to 10.4 percent as expansion of the infocomm technology, pharmaceutical and tech sectors boosted net absorption, CBRE said in a release Thursday (9 April).
According to CBRE, about 0.91 million sq ft of business park space was taken up by occupiers in Q1 2015, including the newly developed Fusionopolis Phase 2A which recorded an 80 per cent pre-commitment level. It also added that the fall in vacancy was also a result of the removal of lettable space from the market, mainly due to the conversion for some of the business park space to retail.
Meanwhile, the completion of several asset enhancement initiatives (AEI) of tolder business parks has bridged the widening gap between existing older business parks and newer ones. The rental gap between city-fringe and rest-of-island business parks sub-markets remained unchanged in the Q1 2015 after a continuous increase in the past four consecutive quarters. The narrowing gap resulted to an increase in leasing activities in the older business parks, CBRE said.
As for rental rates, rents in the city fringe sub-market maintained at $5.50 per sq ft per month versus the previous quarter
but rose 1.9 per cent from a year ago from $5.40 per sq ft per month. Rents in the rest-of-island
sub-market also remained unchanged at $3.65 per sq ft per month from the previous quarter and declined 5.2
per cent from $3.85 per sq ft per month in the same period last year.
It is noted that CBRE Research tracks speculative stock in the city-fringe including business parks such as Nucleos, Mapletree Business City and Nexus. The stock in the rest-of-island sub-market include business parks such as Technopark@Chai Chee, The Synergy and UE Bizhub East.
Going forward, CBRE said given that signs “have been encouraging” for the early part of the year, the business parks market can expect the rest of the year to do well. Michael Tay, CBRE Executive Director for Office Services, said: “Assuming demand remains stable, the limited speculative supply for 2015 should see vacancy rates continue to head downwards.”
He then advised caution given the uncertain economic climate and its possible effects on demand. “In particular, there are a
couple of key factors which could sway the outlook of this sector. One of which is whether demand from the technology sector, which has seen a swath of expansion over the past 12 months, is able to continue its momentum. Secondly, the amount of future stock for the rest of 2015 into 2016 that is yet to be committed by any tenants currently stands at 2 mil sf. The level
of pre-commitment recorded in the coming quarters for this upcoming supply will serve as a good gauge of market sentiments.”
Tay also said he performance of the office market through this period will also have an impact on performance in the business park sector.
“In the longer term, there is currently no known major delivery of business park supply beyond 2016. This should alleviate any concerns about oversupply of business park space,” he added.
One of Singapore’s business parks, CleanTech Park. (Image source: JTC)
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
Related Articles:
HDB revises policy on industrial properties
Singapore to collaborate with Sri Lanka in urban development