Singapore’s improving office leasing deals, which began in July 2009 shows no signs of letting up. The good demand has persuaded some property consultants, that rentals of quality office space in the country’s financial district could be poised to perk up.
The Infocomm Development Authority (IDA) has inked a lease for about 160,000 sq ft at Mapletree Business City on Pasir Panjang Road.
This occupies more than six floors of an 18-storey office building project, which is expected to acquire Temporary Occupation Permit (TOP) soon. With IDA as the latest tenant, the net lettable space of the 436,300-sq-ft building project, which is near Labrador Park MRT Station, is now fully occupied.
Barclays Capital, which occupies 100,000 sq ft of office space at Marina Bay Financial Centre’s Tower 2, is also close to inking a deal with MBF for another 250,000 sq ft of office space in the same tower. The bank is expected to receive the TOP next quarter.
Barclays’s retail bank has a technology centre at Eightrium @ Changi Business Park and it also occupies 100,000 sq ft of office space at One Raffles Quay’s South Tower. The number of its employees has also increased to more than 3,500 people recently, and about 2,000 of the employees are employed at Barclays Capital Global Support Hub.
Big tenants like banks are being offered more choices, as new office spaces are being launched. ANZ, which is currently leasing at OUB Centre at 1 Raffles Place, said it is deciding on whether to move to the new building, or to the Ocean Financial Centre near Collyer Quay.
The 43-storey Ocean Financial Centre project is under construction and will have a net lettable area of about 850,000 sq ft. It is said that the new development has attracted several tenants from neighbouring Ocean Towers, including DMG & Partners Securities, Ifast and Verizon Communications.
Calvin Yeo, executive director of Colliers International, said “We are starting to see our clients, who are MNCs including financial institutions, planning for expansion as their existing leases approach expiry.”
While the initial demand in the office leasing market involves relocating from older properties to newer buildings, the market now moves to actual expansion or to a new demand, according to several market watchers.
“We’re seeing quite a few law firms from Europe coming to Singapore, as well as existing law firms in Singapore expanding,” said Chris Archibold, regional director and head of markets at Jones Lang LaSalle.
“Insurance companies are starting to look at headcount growth of about 5 percent this year followed by a further 5-10 percent per annum for the next few years. Banks are boosting their headcount, not just for private banking but across the board. We’re seeing a number of them bringing high-end back-office support functions again to Singapore,” he said.
According to Mr. Archibold, for international standard prime Grade A office space in Marina Bay and Raffles Place area, rentals will probably hit its current level of $8 psf per month for small occupiers and $7 psf for bigger tenants. This is 58 percent below the peak figure in Q3 2008.
“However, rents for A- and B+ grade offices may still decline a few percent from current levels though the drop should end by Q4 2010," he added.