Singapore’s Central Business District (CBD) office leasing market may have decelerated in the first quarter, but things have certainly been active for business park space outside the city, where rents are relatively lower.
Completed about a year ago along Pasir Panjang Road, Mapletree Business City (MBC) has clinched Nike, which has leased 100,000 sq ft, and Deutsche Bank, which is occupying around 120,000 sq ft. This means approximately 83 percent of MBC’s 1.73 million sq ft net lettable area (NLA) has already been taken up.
According to reports, Mapletree Investments is planning to develop MBC’s second phase on a nearby site currently occupied by The Comtech.
MBC and The Comtech are located on more than one million sq ft of land, which has a single title and previously housed Alexandra Distripark, consisting of five blocks. In 2003, Mapletree upgraded two blocks to The Comtech, which houses data hubs of technology companies and banks, and later dismantled the other three blocks and redeveloped that section of the site to MBC.
Reports also said that Mapletree could wait for the expiration of the tenancy leases of The Comtech before it redevelops the area into modern business park space.
Market analysts suggest that the tenancy agreements will include a clause permitting Mapletree to withdraw the space early, in the event of redevelopment in the area.
“Following the previous CBD office rental peak in 2008, we started to see banks increasingly moving their secondary functions out to business parks,” said Calvin Yeo, Executive Director of Office Services at Colliers International.
Aside from MBC, options for tenants looking for space outside the city include UE Bizhub East at Changi Business Park, which will have a nine-storey business park component with approximately 423,000 sq ft of NLA scheduled for completion in 2H 2012.
Ho Bee is also developing an office project next to Buona Vista MRT Station. The development will have approximately one million sq ft of offices.
The Urban Redevelopment Authority (URA) has also launched tenders for sites next to Paya Lebar MRT station and Jurong East which have minimum office components.
“Leasing activity for business park space and decentralised office space has undoubtedly increased in the past six months. This could be attributed in small part to the increase in CBD office rents,” said Moray Armstrong, Executive Director of Office Services at CB Richard Ellis (CBRE).
“But it is also important to note that many occupiers may also be striving to achieve a long-term lower cost profile offered by business parks and decentralised offices.”
Source: Commercial Guru
