‘A tale of two stories’
The Singapore Office Market can be difficult to analyze at the best of times, but this current market is especially unusual. Depending on who you talk to, there are two different viewpoints, but generally the view is that the market is up.
The general consensus is that demand is ‘muted’, with many tenants being cautious, often resulting in short/medium-term lease extensions. Those looking to ‘right size’ to smaller space are frequently put off by the high cost of fitting out / relocating to new premises. In such cases, many occupiers try to renew in smaller space where they are, but often this is not that easy. Those that need to relocate to save costs tend to focus on finding fitted units that are ‘plug & play’ solutions but again, that is not so simple. Therefore, a hybrid solution combining co-working space is becoming more common. However, on the flip side, you see the fintech companies, investment firms/private wealth management firms, e-commerce operators and family offices, all being very active. So this is indeed, a tale of two aspects of the market.
The general consensus is that demand is ‘muted’, with many tenants being cautious, often resulting in short/medium-term lease extensions. But there is a flip side…
CapitaSpring remains the ‘star of the show’ and is easily the top new office development in the Raffles Place area. Some of the latest deals here include Millennium Capital, which is leasing around 60,000 sq ft, over two whole floors, expanding and relocating from UOB Plaza II. Rumour has it that a major Belgium-based, financial infrastructure provider will be setting up its Asia Pacific head office in Singapore and has already shortlisted space of around 70,000 sq ft in CapitaSpring. Other new tenants to pick CapitaSpring include Southern Ridges Capital, which is relocating from the relatively new development at 18 Robinson Road, needing more new space for expansion. PGIM/ Pramerica Financial Asia, is relocating here from One Raffles Place Tower 2 in early 2022.
Ocean Financial Centre is one of the top premium office buildings in Raffles Place and is still offering fair value. Recent tenants to decide to move here include Japanese bank Shizuoka Bank from UOB Plaza 2, and Korean bank Kookmin Bank from Samsung Hub. Elsewhere in the Raffles Place area, Twitter has expanded to lease an additional floor in CapitaGreen. South 32 Marketing has relocated from CapitaGreen to lease a whole floor at Income@Raffles. IWG/Regus has leased two whole floors (22,000 sq ft) at PLUS. There is much movement coming out of Singapore Land Tower because of substantial renovation/upgrading works planned for the building in 2022/3. CIMB is moving next door to 30 Raffles Place, law firm Lee & Lee is moving to 25 North Bridge Road and Boardroom is planning to move to Keppel Bay Tower.
Depending on who you talk to, there are two different viewpoints, but generally the view is that the market is up.
In the New Downtown area, LinkedIn has expanded to lease a further 22,000 sq ft in Marina Bay Financial Centre Tower 2, Riot Games Publishing has leased 13,000 sq ft in Marina One West Tower and FTI Consulting has leased around 12,900 sq ft in One Raffles Quay South Tower, moving from AXA Tower. Robinson Road/Tanjong Pagar still offers good value for money. Tata NYK Shipping has moved into new office space in OUE Downtown 2, upgrading from ABI Plaza on Keppel Road. Also moving to OUE Downtown 2 is chocolate manufacturer Barry Callebaut Asia Pacific, which will be giving up a whole floor at Millenia Tower (17,000 sq ft). Financial adviser Endowus has leased one whole floor at 158 Cecil Street. Go Jek has leased around 23,900 sq ft in Suntec Tower 5.
Moving from the CBD to the edge, Brazilian aircraft manufacturer Embraer is moving from Ngee Ann City to nearby Goldbell Towers on Scotts Road. Moving further out is Shinryo Singapore which has relocated from OUE Downtown 2 to Haw Par Technocentre. Samsonite Singapore is expanding and relocating next year from TripleOne Somerset to lease over 30,000 sq ft in Dyson Alexandra (fka St James Power Station). SEA Pte Ltd, parent company of e-commerce player Shopee, games developer Garena and digital financial services provider SeaMoney - has committed to leasing most of the space at Rochester Commons, Buona Vista (about 200,000 sq ft), which is due for completion later next year.
Even the new schemes, which are not scheduled for completion for another 18 months (i.e. in early 2023), are now lining up their major ‘early bird’ tenants. Another market rumour is that a Rotterdam-based oil trading company, currently located on Orchard Road, is lined up to lease some 30,000 sq ft (one whole floor) at Guoco Midtown on Beach Road.