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With the continued demand from tech firms and pharmaceutical companies, vacancy rates of business parks across Singapore slid from 10.4 percent to 9.1 percent in the first half of the year, according to CBRE.
In Q2 2015, monthly rents of business parks in the city fringe remained flat at $5.50 per sq ft on a quarterly basis, while that in the rest of the island also remained unchanged at $3.85 per sq ft as landlords kept rental prices attractive to raise occupancy levels.
Besides this, more spaces at upcoming business parks were pre-committed this quarter with Mapletree Business City II (MBC II) signing up its first tenants. These include medical equipment firm Covidien which leased around 56,000 sq ft of space and a multi-national technology company that will occupy 270,000 sq ft of space.
Moreover, out of the 2.93 million sq ft business park pipeline for Q3 2015 to end-2016, nearly 60 percent have already been pre-committed ahead of their completion, said CBRE.
Although there are still some available business park spaces in three out of seven upcoming developments, only Ascent and MBC II have premises with large scale and quality specifications.
As a result, CBRE estimates that there will be no new business park space available after next year, unless the government releases more land for this type of development or some existing projects are redeveloped.
“Occupiers with requirements for quality business park space have very limited options at present. There is clear appetite for business park space given the consistently high pre-commitment levels of business park projects,” said Michael Tay, CBRE’s Executive Director for Office Services.
“So far, the number of business park land sites for public tender has been few and far between with the majority of major business park developments a result of redevelopment of existing land banks, or redevelopment of existing legacy buildings,” he added.
It is noted that only three business park sites have been sold through the Government Land Sales Programme. These are Biopolis Phase 5 (Nucleos) in 2010, Nexus in 2011 and Fusionopolis Phase 5 (Galaxis).
Looking ahead, CBRE forecasts that the vacancy rates at business parks could become tighter due to the lack of supply beyond 2016.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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