New office tower at site of former Market Street Car Park

A billion-dollar office block is being erected at the site of Market Street Car Park in Singapore’s financial district.

As the market for prime-grade office space is softening, property analysts are wary that the developers may not achieve the rentals they are seeking.

Property group CapitaLand, together with CapitaCommercial Trust (CCT) and Mitsubishi Estate Asia (MEA), will jointly develop the former Market Street Car Park into a new Grade A office tower.

The demolition of the car park was completed in December 2011.

Under the agreement, CapitaLand, CCT and MEA own 50 per cent, 40 per cent and 10 per cent interest respectively in MSO Trust, an unlisted special purpose sub-trust set up to undertake the development.

The office tower, called CapitaGreen, will cost S$1.4 billion to develop.

The new building, which sits on the 58,954 square feet site, will also have a change of address to 138 Market Street to mark its new beginning.

When completed, CapitaGreen will have about 700,000 square feet in lettable office space over 34 levels, with around 180 parking lots.

By then, analysts said CapitaGreen will provide the largest office supply around the Central Business District (CBD), once completed at the end of 2014.

Lynette Leong, CEO of CapitaCommercial Trust Management, said: “Our estimate is that by then, market rent should be between S$12 to S$14 per square foot for grade A office space, and given the high specification of this building,
we should be able to attract tenants who are able to afford that kind of rental.”

Nicholas Mak, executive director of research and consultancy at SLP International, said: “Any new building that is going to be completed in the next four years will have to be price takers. They can ask for a certain rental, but they will also have to be mindful of what their competitors are charging.”

Colin Tan, head of research and consultancy at Chesterton Suntec International, said: “They have started their marketing pretty early, given the completion is only end-2014. I think…right now, the office market is on the verge of turning and we may be in the down cycle. So, I think they may be anticipating this and may be trying to secure best rentals that they can fetch right now.”

Helping the effort, CapitaLand is flying the green flag over the project, saying it will be the most environmentally-friendly building in Singapore’s CBD.

Source : Channel NewsAsia – 6 Feb 2012

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