Office Market Review

Demand Q1 2023

Demand for prime office space has been healthy, but not particularly strong. Tech companies continue to be the market drivers, as they have been for quite a while, but now even they have become more cautious, on the back of a tightened financing landscape. Therefore, we are expecting growth in demand from this sector to be slower.

There are two narratives on demand from the ‘tech sector’. On the one hand, you have Amazon committing to lease around 370,000 sq ft (over 11 floors) in IOI Central Boulevard (they already occupy 100,000 sq ft of prime office space in Asia Square, 45,000 sq ft in One George Street and 80,000 sq ft in Capital Square). Bytedance / Tik Tok are also taking up a further 80,000 sq ft in Capital Tower, space that was previously occupied by JP Morgan (they already occupy substantial prime office space in One Raffles Quay and Guoco Tower). Facebook / Meta is also leasing substantial space in IOI Central Boulevard.

On the flip side, you have e-commerce company Shopee / SEA Group giving up some 200,000 sq ft of office space, that they have only just leased, in Rochester Commons, Buona Vista. These tech firms therefore have a significant impact on supply within the office market.

Raffles Place continues to be one of the most sought-after locations. Qube Research & Technology has leased a whole floor in 6 Battery Road. Specialist chemical company Sika Asia Pacific Management has leased a floor in One Raffles Place Tower One. Bulk shipping company Oldendorff has expanded, to lease a whole floor in One George Street. Elsewhere, the Regional HQ offices of Burger King has leased a whole floor in Manulife Tower. Celanese has leased a whole floor at Hub Synergy Point. PIL Shipping Lines is relocating to Guoco Midtown, leasing two whole floors (60,000 sq ft). Tenable Network Security has leased a floor in Suntec Tower 2.

Demand continues to be boosted by companies displaced, due to the refurbishment of their current buildings. Robinson Point was a prime example of this, but with a twist. Osome, who occupied space as a sub- tenant from Deskera, has leased their own standalone unit in Robinson 77. Deskera themselves have decided to go down the hybrid office route. Gateway Law is moving to Springleaf Tower and Analysys Mason is also moving to Robinson 77.

The twist was the refurbishment plans were ultimately shelved. This left some tenants with difficult decisions to make. Consort Bunkers had successfully secured new office space, leasing a whole floor in GB Building. Subsequently, they have been told they don’t need to move so soon. Another law firm, Joseph Tan Jude Benny, was told of the ‘U-turn’ news at the ‘eleventh hour’ but still decided to proceed with their relocation plans to Capital Tower.

The next building scheduled for major refurbishment is Cross Street Exchange, where most of the existing tenants are already looking for new homes. Therefore, all these types of demand create a false market in a way, where it is not actually new demand for larger office space, but simply seeking alternative premises to replace their current offices.

Demand continues to be boosted by companies displaced, due to the refurbishment of their current buildings.

Increased demand across all sectors