Schroder, Lloyd’s Asia, Twitter sign up at CapitaGreen

MORE names of tenants signed up at CapitaGreen and South Beach Tower, the two newest office towers in town, have been emerging from leasing agents this week.

At CapitaGreen, which received Temporary Occupation Permit (TOP) on Dec 18, Lloyd’s Asia has leased about 75,000 sq ft.

“They will be leaving Asia Square Tower 1, where they currently occupy around 65,000 sq ft,” said Cheng Siow Ying, executive director of business space at DTZ. “We also understand that Schroder will occupy about 44,000 sq ft of office space at CapitaGreen. They will be giving up a total of about 33,000 sq ft at OCBC Centre and 11 Beach Road,” she added.

There is also market talk that ACE Insurance is taking about two floors or 38,000 sq ft, while Twitter has signed up for 22,000 sq ft at CapitaGreen.

On Dec 22, a release from the project’s joint developers said that leases had been secured for 50.4 per cent of the 700,000 sq ft net lettable area (NLA). The 40-storey Grade A office was developed on the former Market Street carpark site by CapitaLand, CapitaCommercial Trust and Mitsubishi Estate Asia.

At the time, a spokeswoman for CapitaLand declined to state the rents achieved in the building thus far, but had added: “Most of the space leased so far is in the low-rise and mid-rise zones. Moving ahead, we are confident of achieving higher rents, in line with our target rents of between S$12 and S$14 psf per month, given the steady momentum of leasing commitments at CapitaGreen and the limited new CBD office supply in 2015.”

She also declined to comment on the names of the latest tenant signings due to confidentiality clauses in the lease agreements.

Over at South Beach Tower, Lukoil is said to have signed up for 20,000 sq ft, according to Knight Frank Singapore director of office Louise Toovey.

Other tenants earlier reported to have inked leases at South Beach Tower include Sanofi, Rabobank, TMF Group, Bain and Company and De Lage Landen.

The City Developments-IOI consortium that developed the 34-storey office tower said on Dec 18 that 80-90 per cent of the 500,000 sq ft NLA of offices has been leased, achieving monthly rents of S$9-12 psf.

South Beach Tower and CapitaGreen have contributed to the bulk of leasing activity in the fourth quarter of 2014, DTZ noted.

Also contributing to the Q4 demand for offices were occupiers in Equity Plaza who saw a sudden termination of their lease contracts by the landlord ahead of a major spruce-up in the building and had to look for alternative premises immediately. Lim & Tan Securities found new premises at Income@Raffles, while Gateway Law and Equinix Singapore secured premises at Robinson Point, said Ms Cheng. “These three companies will only move into their new premises next year,” she added.

According to DTZ, islandwide net absorption of office space shrank 37 per cent to 280,000 sq ft in the fourth quarter from 442,000 sq ft in Q3 2014. Full-year 2014 net demand declined slightly to 1.36 million sq ft from 1.45 million sq ft in 2013.

Based on Knight Frank’s data, as at Q4 2014, a total 10.2 million sq ft (gross floor area) of pipeline office supply is expected to come on-stream till 2018. A big chunk of this space – around 4.7 million sq ft GFA or 46 per cent of the pipeline supply – will be completed in 2017. (see infographic)

“Despite a moderate inflow of new office space in the next two years, anticipated slower economic growth and higher market volatility in 2015 could prompt businesses to adopt a more measured approach in office space expansion and relocations in a bid to manage rental costs,” said Ms Toovey.

The property consulting group predicts 5-7 per cent increase in the average gross effective prime office rental value in 2015, after the 6.1 per cent hike in 2014 to S$11.27 psf. In 2013, the increase was just 1.2 per cent.

Knight Frank head of Singapore research Alice Tan attributes the 2014 rental appreciation to tightening prime office supply, higher leasing activity and businesses signing leases in anticipation of further rental escalation in 2015.

The Business Times – January 1, 2015