Leasing momentum in the office sector remains strong with an improving economy. Analysts said this has drastically cut the amount of so-called “shadow space” or vacant office space not on the market.
In the first half of 2009, shadow space was 550,000 square feet. Now, it’s just a tenth of it.
Meanwhile, demand for new office space like the Marina Bay Financial Centre has eased concerns of a supply glut.
The Marina Bay Financial Centre is seeing strong take up from multi-national corporations and financial services firms.
Its Tower One and Two have been fully taken up.
Finance Minister Tharman Shanmugaratnam, said: “Asian finance is back to growth and Singapore is seeing an enhanced role as a gateway to the region and a centre for risk management. The Marina Bay area will be a significant part of this story.”
The MBFC has nearly three million square feet of prime Grade A office space.
And DBS Bank will join other financial heavy weights there when it takes up over half of the space at Tower Three.
The third office tower will also house two of the largest trading floors in Singapore.
The 1.3 million-square-foot office building is expected to be completed by 2012.
Wilson Kwong, CEO, Raffles Quay Asset Management, said: “DBS has taken up 700,000 square feet making it 55 per cent to be committed at the moment right now.
“We are talking to a number of prospects who are interested in taking up some space in Tower 3 although TOP for the tower is expected to be some two years away.”
Giving an update on Tuesday, Mr Kwong said tenants in Tower One are making arrangements to commence fitting out and will move in by July.
With more new office space coming on stream, analysts expect companies to choose better facilities.
Donald Han, managing director, Cushman & Wakefield, said: “We expect this year’s demand to hit quite close to 1.7-1.8 million square feet in terms of positive demand. Out of that 2.6 million square feet of new supply coming up on stream this year, almost 50 to 55 per cent have already been pre-committed.”
Despite the recovery of demand in the office sector, market watchers said landlords are likely to hold firm on rentals. They expect overall office rents to remain flat for the whole of 2010 and possibly bottom out in the fourth quarter.
Average monthly Grade A rents at Raffles Place fell 2.9 per cent on-quarter to about S$7.52 per square foot in Q1 while office space in the Suntec-Marina area cost about S$6.67 psf per month, down by about one per cent on-quarter.
Rents at the Marina Bay area range between S$7 and S$8 psf depending on size.
Meanwhile, the Marina Bay Link Mall is slated for completion in the third quarter.
To date, about 65 per cent of the mall spanning 176,000 square feet has been pre-committed and business could commence by year-end in the fourth quarter.
Source : Channel NewsAsia – 13 Apr 2010