IN A bid to help alleviate an office space crunch, the Singapore Land Authority (SLA) hopes to release another 368,000 square feet in gross floor area for temporary conversion by the middle of the year. But that is still 20 per cent less than what was released in the same period last year.
Mr Teo Cher Hian, director of private land operations at SLA, said this shortfall is due to there being fewer state properties left to convert.
The latest site to be offered this month will be the Singapore Badminton Hall and Association’s premises at Guillemard Road.
The state land agent has already released two properties for tender this year – the former Monk’s Hill Secondary School and Siglap-Changi Community Centre.
Mr Teo said the SLA will monitor market take-up and identify more sites if demand merited.
Average office rents shot up over 50 per cent last year. However, Urban Redevelopment Authority statistics show potential new office supply of around 10 million square feet over the next five years when some major new developments are complete.
Mr Colin Tan, research head at Chesterton International, believes SLA is probably being cautious. “It’s probably to relieve the current squeeze. But have they done studies to see if releasing now will affect supply, say, two years down the road?”
A Colliers International report shows rental growth for prime office space moderating in the past three months, rising a more modest 3.2 to 6.9 per cent quarter-on-quarter.
Instead, it said industrial rents are rising faster – some 16 per cent in the past quarter. That’s because more companies had turned to high-specification industrial space as an alternative amid rising office rents.
Citibank, DBS Bank and Standard Chartered Bank have announced they will relocate some of their operations to built-to-suit office complexes in Changi Business Park.
Mr Tan Boon Leng, Colliers’ director for industrial sales and leasing, said: “It is expected that more banks are likely to jump on this bandwagon soon.”
Colliers expects rental for high specification industrial space to rise 20 per cent for the rest of the year.
But industrial rents are coming from a low base. Knight Frank’s research head, Nicholas Mak, said: “Rentals in the industrial sector are still single digits, $3 to $4 per square foot per month, compared to $10 to $18 per square foot in the office sector. So, there is obviously more upside for growth in percentage terms.”
Source : Today – 2 Apr 2008