CapitaLand's revamped Funan secures 98% pre-leasing commitment for twin office blocks

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THE twin office blocks of CapitaLand's revamped Funan integrated development has garnered 98 per cent pre-leasing commitment of its total office net lettable area (NLA) of 214,000 square feet (sq ft).

The CapitaLand Mall Trust-owned (CMT) Funan secured the pre-leasing commitment of about 210,000 sq ft of its NLA when it got its Temporary Occupation Permit in April.

Funan’s office tenants, which comprise public agencies, multinational corporations and startups, are slated to move into the two six-storey blocks progressively from the second-quarter of 2019.

The south office block, which has a total NLA of 95,600 sq ft, has been fully leased to three public agencies: the Attorney-General’s Chambers, Singapore Department of Statistics and the Smart Nation and Digital Government Office.

The north block's office tenants include German sporting goods company adidas' South-east Asia office and co-working space WeWork.

"The revamped Funan caters to the new generation of professionals who prefer to work in a collaborative and inspiring environment, at a convenient location where they can unwind at the end of the day with a whole host of lifestyle amenities under one roof," said Tony Tan, CEO of CapitaLand Mall Trust Management.

"With a high commitment of 98 per cent, Funan’s diversified and quality office tenant base will progressively contribute earnings to CMT from 3Q 2019.”

CapitaLand shares closed up 0.85 per cent, or S$0.03 at S$3.57 on Tuesday, while CapitaLand Mall Trust units also closed up 0.82 per cent, or S$0.02 at S$2.45.

Source: Business Times, 8 May 2019

Oxley's Chevron House sale a better deal for buyer than seller: DBS analysts

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ANALYSTS at DBS Group Research are of the view that the "buyer is the bigger beneficiary" in Oxley Holdings' deal to sell Chevron House for S$1.025 billion, although Oxley and some industry sources disagree.

The sale comes just 16 months after the debt-laden property developer acquired the 32-storey office tower in Raffles Place for S$660 million in December 2017. Oxley has agreed to sell the property to Golden Compass, a wholly-owned unit of US-based real estate fund AEW.

"Based on the available information and our ballpark estimates, we believe the buyer is the bigger beneficiary of this transaction by acquiring the office component of Chevron House at below 4 per cent cap rates, with reversionary potential close to 5 per cent cap rates.

"This has yet to factor in any potential plot ratio upside from the government schemes to incentivise the redevelopment of the Central Business District," DBS analysts Rachel Tan and Derek Tan wrote in a research note on Thursday morning.

The cap rate is the rate of return on an investment property based on the income it is expected to generate.

In response to the analysts' comments, an external spokesman for Oxley said it would not be fair to compare this sale to that of a completed building, seeing as Chevron House still has ongoing alterations, additions and asset enhancement works.

"Also, the building was sold with no tenancy agreements, so it will be up to the buyer to source for tenants," the spokesman told The Business Times on Thursday evening.

"Many developers in the market are saying that Oxley got a great deal by selling a building just based on drawings."

Under the sale-and-purchase agreement, after Oxley receives an initial S$210 million, it is to complete the works and also divest the retail and banking units before the buyer will pay the balance of the consideration and discharge the bank loans.

An industry source who declined to be named said: "Oxley managed to sell it for a handsome profit to shareholders in such a short time, despite the incomplete construction and zero tenancy agreement.

"This could potentially go down as the deal of the year."

The DBS analysts said the initial cash proceeds of S$210 million will facilitate Oxley's repayment of its first tranche of retail bonds of S$300 million expiring on Nov 5, though certain deal terms have not been revealed.

"The devil is in the details, but the terms attached between Oxley and the buyer with regard to the divestment of the retail and banking units, and any other terms and conditions are not made known," they said.

"If we assume that the first tranche of payment is potentially the maximum gain or cash proceeds to be received by Oxley for the sale, we believe the cash received will alleviate some of Oxley's urgent cash requirements, though not completely."

BT understands that the initial S$210 million payment will be the maximum cash proceeds Oxley will receive under the deal.

"There will be further deleveraging when the buyer assumes Chevron House's bank loans upon completion of the transaction when conditions are met," the analysts added.

BT reported on May 1 that the buyer will take over the S$450 million in borrowings which Oxley had taken out to finance its 2017 acquisition of Chevron House. The sale will thus reduce Oxley's debt by that amount.

Oxley has two tranches of retail bonds maturing soon: S$300 million due on Nov 5, 2019, and S$150 million due on May 18, 2020.

It also has S$238 million of corporate borrowings expiring in fiscal 2020/2021, and S$631 million of euro medium-term notes expiring in fiscal 2021/2022.

Oxley shares closed at S$0.32 on Thursday, down 0.5 Singapore cent.

Source: Business Times, 3 May 2019

Oxley confirms S$1.025b sale of Chevron House

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PROPERTY developer Oxley Holdings announced on Tuesday that it had signed a deal to sell Chevron House for up to S$1.025 billion, just 16 months after acquiring the prime office building in Raffles Place for S$660 million.

Oxley said that on April 29, it entered into a sale-and-purchase agreement (SPA) with Golden Compass (BVI) for the latter to buy the entire interest in its wholly-owned subsidiary Oxley Beryl, and take over the existing bank loans for an aggregate value of up to S$1.025 billion.

Oxley Beryl owns Chevron House, a 32-storey commercial development comprising 27 levels of office space and a five-storey retail podium; the building's existing net lettable floor area (NLA) is about 261,280 sq ft.

Oxley's corporate presentation in February revealed that the plan is to increase the building's NLA by 43 per cent to about 374,165 sq ft, subject to approval from the authorities.

The S$1.025 billion sale price works out to about S$2,739.43 psf on the increased NLA. The property sits on a site with a 99-year leasehold tenure from December 1989, leaving nearly 70 years on the lease.

Oxley said the proposed sale is expected to have a positive impact on its net tangible assets per share and earnings per share for the current financial year ending June 30.

It will complete the alterations, additions and asset enhancement works, begun on March 1 on the property, before the final completion of the proposed sale.

The consideration was arrived at through arm's-length negotiations, taking into account the enterprise value of Oxley Beryl, said Oxley.

Under the deal, Golden Compass is to pay S$210 million upon the first completion of the proposed sale, after which 82.35 per cent of the issued and paid-up capital of Oxley Beryl, among others, will be transferred to Golden Compass.

The buyer is to then pay the balance of the consideration and discharge Oxley Beryl's bank loans upon the final completion of the sale, after which the remaining shares in Oxley Beryl will be transferred to Golden Compass. The final completion will take place after the works are done and after the retail and banking units there have been divested.

The Business Times understands that the buyer will take over the S$450 million in borrowings that Oxley had taken out to finance its 2017 acquisition of Chevron House. The sale will thus reduce Oxley's debt by that amount.

The SPA also provides for certain retention sums which will be released when the relevant conditions are fulfilled. Oxley did not disclose these sums or conditions.

Completion of the proposed sale is subject to certain conditions precedent, including shareholders' approval if required by the Singapore Exchange (SGX).

Golden Compass is wholly-owned by the US-based real estate fund AEW. BT had reported in March that Oxley had accepted an expression of interest from AEW to acquire Chevron House.

As one of Singapore's most highly-geared developers, Oxley has been in deleveraging mode of late. It told BT in March that it aims to gradually reduce its net gearing to one time by end-2019, from 2.55 times net debt-to-equity as at end-2018.

It has S$300 million in bonds due in November 2019 and S$150 million in bonds maturing in May 2020.

To pare down its debts, Oxley is focused on selling assets and a quick turnover for completed projects.

In Singapore, aside from Chevron House, it is also looking to sell its Novotel and Mercure hotels on Stevens Road. Oxley has hired exclusive agents to sell the hotels, after having called off a S$950 million sale in March. The company has received interest for the hotels from parties in Hong Kong, BT understands.

Oxley shares closed at S$0.33, up three Singapore cents on Tuesday.

Source: Business Times, 6 May 2019

Office-sharing startup WeWork files for stock market listing

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WEWORK, the fast-growing office-sharing startup, said on Monday it had filed documents for a stock market listing to help fuel further expansion.

The New York-based firm valued at some US$47 billion by private investors and operating in some 600 cities worldwide, said it filed its registration confidentially last December with the Securities & Exchange Commission.

The confidential filing allows the company to begin the listing process before divulging key financial and business information.

"This process will enable WeWork to make the decision to become publicly traded, subject to market and other conditions," WeWork said in a statement.

WeWork has taken the lead in the co-working space and in the process is disrupting the office and real estate market with smartly designed offices, often with free-flowing beer and coffee.

Started in 2010, WeWork has hundreds of thousands of customers from individual entrepreneurs to Fortune 500 companies needing temporary or permanent office space.

The monthly deals can be particularly attractive to independent workers who do not want to make a long-term commitment.

But WeWork also rents to employees of large firms such as IBM where regional offices are less convenient.

In January, Japanese tech giant SoftBank invested some US$2 billion in the company as it rebranded itself as "The We Company".

WeWork offered no details on how much money it would seek to raise, its valuation or the timing of its offering.

But the news comes amid a wave of listings from Silicon Valley "unicorns", or startups worth at least US$1 billion, including Lyft, Pinterest, Slack and Uber.

In 2017, WeWork agreed to buy the Lord & Taylor flagship store on New York's Fifth Avenue in Manhattan in a sign of the disruption of the real estate market.

Separately, it was announced in Singapore on Tuesday that WeWork will open its second WeWork Labs location at 380 Jalan Besar in May.

WeWork has also been recognised as a Startup SG Founder Accredited Mentor Partner (AMP) by government agency Enterprise Singapore.

The Startup SG Founder scheme provides mentorship and startup capital grant to first-time entrepreneurs with innovative business ideas, with ESG providing up to S$30,000 by matching S$3 for every dollar raised.

Industry leaders as appointed AMPs identify qualifying applicants based on the uniqueness of business concept, feasibility of business model, strength of management team, and potential market value.

Source: Business Times, 1 May 2019

Commercial real estate deals roaring back to life

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A series of commercial real estate deals amounting to $1.06 billion was inked in the past week, surpassing the total investment volume for the commercial sector in the first quarter of this year.

Evia Real Estate and Metro Holdings bought 7 and 9 Tampines Grande, a pair of premium Grade A office blocks from City Developments Limited (CDL) and Alpha Investment Partners for $395 million.

Mitsubishi Estate and CLSA entered into a share purchase agreement with a Perennial-led consortium to buy Chinatown Point mall for $520 million, while Realty Centre, an office building in Tanjong Pagar, has sold for $148 million in the year's first commercial collective sale deal.

The investment sales market took a breather in the first three months of this year, with total sales staying muted at $4.6 billion, a 21 per cent decline quarter on quarter, and only about 13 per cent of the total annual investment volume last year.

The residential sector chalked up sales of $1.2 billion, with the commercial and hospitality sectors next at $900 million apiece, followed by the industrial sector at $600 million. Mixed-use and others posted $1 billion of sales.

The office sector was quiet in the first quarter, with only a few strata deals. Alpha Investment Partners acquired five floors in Suntec Tower 1 and one floor in Suntec Tower 2 for $160 million.

The retail sector saw several shopping mall transactions. In the largest private transaction of the quarter, CapitaLand and CDL acquired Liang Court mall for $400 million, and SC Capital Partners bought Rivervale Mall for $230 million.

There were a few significant transactions in the industrial and hospitality sector. SGRE Banyan entered into a $227.5 million sale-and-leaseback deal for Vibrant Group's 121 Banyan Drive warehouse. Cheong Sim Lam acquired Ascott Raffles Place Singapore for $353.3 million.

The office sector is the hottest one here after Grade A Central Business District rents extended their gains by 12.7 per cent last year and potentially another 9 per cent this year. Limited supply completions and decade-low vacancy rates have raised investor interest in the sector.

Activity in the office sector is expected to pick up further in the coming quarters, with Chevron House, Anson House and 139 Cecil Street going on the market. In addition, Frasers Property is in talks with interested parties for a potential sale of Frasers Tower.

DUO Tower and its retail component are also on the market with potential suitors such as CapitaLand Commercial Trust, Singapore's biggest office landlord, according to Bloomberg.

There could also be some deals inked in the hospitality sector. RB Capital is said to be in exclusive due diligence on Andaz hotel at DUO. Oxley has put its Mercure and Novotel hotels back onto the market, while Global Premium Hotels has placed its portfolio of 23 hotels for sale at $1.4 billion.

The writer is the head of research for Singapore and South-east Asia at global property consultancy Cushman & Wakefield.

Source: Straits Times, 28 Apr 2019

Central region's office rents dip 0.6% in Q1, first decline since mid-2017

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Office rents in the central region dipped in the first three months of the year, the first quarter-on-quarter decline since the April-June period in 2017.

Rents slipped 0.6 per cent from the last three months of last year, Urban Redevelopment Authority (URA) data showed yesterday.

This was in contrast with the 0.5 per cent rise from the third to fourth quarters last year.

The price index rose 3 per cent for the first quarter, a faster pace of gain compared with the 2.4 per cent increase with the previous quarter.

Ms Christine Li, head of research for Singapore and South-east Asia at Cushman & Wakefield, said this is not surprising as investor interest in commercial assets has grown.

"The divergent performance of the office price and rental indices could be a sign that tenants are showing some resistance to higher rents, in view of the uncertainties in business outlook," she added.

A fall in the amount of available office space helped send the islandwide vacancy rate from 12.1 per cent at Dec 31 to 11.8 per cent at March 31.

Ms Tay Huey Ying, JLL's head of research and consultancy for Singapore, said the supply squeeze will continue to give landlords the upper hand in lease negotiations.

That suggests that this year could outperform 2018 in terms of rent growth in this zone, she added.

Cushman's Ms Li said the slowdown in the economy has been felt most keenly in manufacturing, "nevertheless, office rental growth in 2019 can be sustained due to the limited supply and healthy pre-leasing activities in the market".

There was about 733,000 sq m in gross floor area of office space in the pipeline as at March 31 against 732,000 sq m as at Dec 31.

Retail rents in the central region fell 0.2 per cent in the first quarter, after rising 1.2 per cent in the previous quarter.

Ms Tay said the dip was likely due to changing tenant profiles, such as the increasing take-up of prime-level space by rent-sensitive occupiers requiring large spaces.

The URA price index of retail space in the central region slumped 1.9 per cent in the quarter against an increase of 1.5 per cent in the last three months of last year.

The amount of occupied retail space fell by 14,000 sq m in the first quarter compared with a rise of 24,000 sq m in the previous quarter.

Ms Li said: "Retailers are still cautious about taking up spaces."

The islandwide retail vacancy rate grew to 8.7 per cent at the end of the first quarter this year, from 8.5 per cent at the end of last year.

There was about 364,000 sq m of retail space in the pipeline as at March 31, down from 387,000 sq m as at Dec 31.

Ms Tay said: "On a more upbeat note, the Orchard Road revamp and the $9 billion expansion plans by Marina Bay Sands and Resorts World Sentosa should inject confidence in the tourism and retail industries.

"Nonetheless, the restructuring in the retail space will likely see the URA retail rental index flip-flopping between marginal upticks and downticks in the short term."

Source: Straits Times, 27 Apr 2019

Office and retail rentals reverse direction, head south in Q1

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Observers say office outlook still fairly positive for now, though retail segment still weak

RENTALS of office and retail space reversed direction to dip in the first three months of 2019, owing to uncertainties in the business outlook and continued woes in the retail sector.

Going by official figures from the Urban Redevelopment Authority (URA) on Friday, rentals in the central region of Singapore slipped by 0.6 per cent in the first quarter of 2019, in contrast with the increase of 0.5 per cent in the fourth quarter of 2018. This was the first quarterly drop since Q2 2017.

CBRE South-east Asia's head of research Desmond Sim said the correction in rentals could be due to the contrasting performances of good-quality office buildings in the core Central Business District (CBD) versus the older and less well-located offices.

Island-wide vacancy fell to 11.8 per cent, from 12.1 per cent at the end of the previous quarter, supported by net absorption of 19,000 sq m mainly taken up by technology firms and co-working operators.

Mr Sim said: "The office outlook remains fairly positive for now. With very decent pre-lease commitments already in place and a tapering supply pipeline, landlords' strong leverage is likely to be maintained."

Retail rentals in the central region, on the other hand, weakened by 0.2 per cent in the first quarter of this year, against the growth of 1.2 per cent in the previous quarter.

This essentially erased all the gains since the recent bottom in Q2 2018, noted Christine Li, head of research for Singapore and South-east Asia at Cushman & Wakefield. She said retail woes in the market do not seem to have blown over.

"The absorption of the island-wide retail space continues to lag supply. In Q1 2019, the amount of occupied retail space decreased by 14,000 sq m, although more space was also taken off the market with net supply reducing by 2,000 sq m during the quarter.

"The American diner chain Chili's closes all its branches in Singapore, while Crabtree & Evelyn is also shutting all but one store in a move to go online."

She added that retailers appear to be cautious about taking up spaces. "It does not help when the government announced in Budget 2019 that the dependency ratio ceiling for the services sector will be further tightened.

The move may cause some short-term pain and result in retailers holding back expansion plans in light of the anticipated labour crunch."

Island-wide vacancy rates have risen from 8.5 per cent in Q4 2018 to 8.7 per cent in Q1 2019.

On the price front, the official office price index rose 3 per cent for the first quarter - faster than the 2.4 per cent increase in the previous quarter, on the back of improved investment appetite for prime office assets, noted Tricia Song, head of research for Singapore at Colliers International.

En bloc transactions in the quarter included the sale of Manulife Centre, acquired by ARA Asset Management and British property group Chelsfield for S$555.5 million, and six levels at Suntec City reportedly sold to Alpha Investment Partners and another floor at the same property that was sold to an unnamed party.

"The punitive additional buyer's stamp duty measures on the residential sector since July 2018 should continue to fuel a shift in investor interest towards the commercial sector," she said.

The price index for retail space in the central region slumped 1.9 per cent in Q1, contrasting with the increase of 1.5 per cent in the previous quarter.

Source: Business Times, 8 May 2019

Guoco Midtown's flexible leases may help draw tenants

Developer GuocoLand is going all out to woo tenants for the $2.4 billion mixed-use Guoco Midtown project in Beach Road, which will be completed in 2022.

The attractions include a 40m swimming pool and a circuit track, but its tweak to the traditional leasing concept is what may just tip the office market battle in its favour.

Tenants are usually locked into a certain square footage of office space over a period of five years, for example.

But at Midtown, 15 per cent of the office net lettable area has been set aside for adaptable spaces.

Businesses can choose to expand or contract their teams without moving or renovating their main offices during the lease.

"In one aspect, it's a bold move, but it's also an offensive move," said GuocoLand Singapore group managing director Cheng Hsing Yao.

He told The Straits Times on Monday: "We are not just competing among landlords but with operators that offer flexibility."

Mr Cheng was referring to co-working companies, which have seen tremendous growth recently.

A Colliers International study last month found that the flexible workspace sector made up 45 per cent of prime-grade office net absorption last year.

Much of the growth is a reaction to the rigidity of leasing terms as landlords aim to secure rental stability, added Mr Cheng.

This will not be developers' first attempt to meet the challenge posed by co-working spaces.

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Mapletree, Keppel Land and Lendlease have their own co-working brands. A CapitaLand joint venture has acquired a stake in a co-working business, while City Developments runs a flexible workspace with a co-working operator.

Real estate professor Sing Tien Foo from the National University of Singapore thinks more flexible space in the market is a big plus, as it allows tenants to better plan resources in line with market cycles.

He also expects GuocoLand's move to create competition for co-working space providers.

Co-working giants WeWork and JustCo, which each have at least 10 locations here, declined to comment.

Prof Sing believes more developers will follow suit to offer more flexibility in their leasing terms, which is good news for tenants.

"In the past, firms expanding their businesses may have to take up new office space in some other buildings to accommodate new operations and staff.

"This will increase the fixed costs for the firms, having multiple sets of overheads in different locations."

He said landlords may have more to lose in such a case, as the landlord-tenant relationship becomes "a more collaborative and risk-sharing partnership arrangement".

Ms Jenny Ling, director of office services at Colliers International, warned of "white elephant" space: "One potential drawback could be that the landlord runs the risk of having vacant space within its development if there is no actual demand for the flexible space."

Mr Cheng said GuocoLand is guarding against rental volatility by ensuring tenants are from different sectors. He added that 15 per cent of net lettable area for flexible contracts is still manageable.

CBRE Singapore managing director Moray Armstrong said there will likely be similar lease models in the market in future, where core space will be offered at a lower cost, while a premium will be charged for flexibility, similar to how airline customers pay higher prices for a ticket that can be changed.

The office rental market's outlook is positive. Mr Armstrong said grade-A space has seen "strong occupier interest in quality buildings".

"From now through 2022, Singapore's office supply pipeline appears commensurate with the expected level of demand."

Source: Straits Times, 25 May 2019

Three adjoining office units at Peninsula Plaza up for sale with S$9.29m guide price

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THREE adjoining office units at Peninsula Plaza will be put up for sale in an expression of interest exercise on Thursday at a guide price of S$9.29 million, exclusive marketing agent CBRE said.

The exercise closes at 3pm on May 29.

Located on the 12th storey, the area of each unit ranges from 1,001 square feet to 1,776 sq ft. The units with a 999-year tenure have a combined area of 4,262 sq ft.

The indicative price of S$9.29 million works out to S$2,180 per sq ft based on the strata area.

Yap Hui Yee, associate director of capital markets at CBRE, noted that this is "attractive" compared to the office units at the nearby High Street Plaza and The Adelphi, which are transacting at S$2,400-S$2,600 per square foot.

She added that there will be no additional buyers' stamp duty or sellers' stamp duty imposed on the units, and that the prospective buyer, be it a local or a foreigner, has the option to purchase the units either individually, or all three collectively.

Peninsula Plaza is a mixed-use development comprising a six-storey retail podium and a 24-storey office block. It is a short walk from City Hall MRT interchange station, which serves the East-West and North-South lines. Prominent landmarks include the National Gallery, St Andrew’s Cathedral and the Supreme Court.

"The successful buyer will continue to benefit from the ongoing rejuvenation within the City Hall vicinity, which has seen much transformation, with new or refurbished developments," said Ms Yap.

She added: "We are optimistic that the property’s rare 999-year tenure, centralised location, and excellent connectivity are strong attributes that will appeal to both end-users and investors. The location is ideal for trades and businesses, including law or accountancy firms, allied health professional enterprises, and commercial schools."

Source: Business Times, 8 May 2019

GuocoLand to redefine office leasing at Guoco Midtown

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MORE companies, finding that they may need to scale up and down following business imperatives, are realising that the traditional long-term lease for their office space may hamper this.

Or they may want a long-term lease on the space for most of their core operations, but also the flexibility of taking on more space to start a new project.

GuocoLand, taking this into consideration, wants to be more flexible with its office tenants at its S$2.4 billion, mixed-use Guoco Midtown in Beach Road.

In this development to be completed in 2022, GuocoLand will set aside 15 per cent of the 650,000 sq ft of net lettable area (NLA) of office space as flexible, adaptable space. This will include two floors for tenants to use to establish "innovation labs" or start-ups.

GuocoLand has not decided whether it will run this space or team up with flexible working operators.

The developer said the floor plates of the offices are built to be flexible and can be sub-divided, and that it will work with tenants to design and sub-divide the floor space according to their needs. The squarish floor plates range from 27,000 sq ft to 30,000 sq ft in size.

The office block has 30 storeys, and a total gross floor area of 770,000 sq ft.

Cheng Hsing Yao, the group managing director of GuocoLand Singapore, told reporters on Monday: "A lot of Grade A office buildings are managed in very contractual ways. You sign a contract for five years, and that's it. We will be working with different tenants here to structure contracts in keeping with business plans.

"The co-working business has been able to grow to a large extent because landlords have been rigid."

He acknowledged that setting aside 15 per cent of the NLA for flexible contracts may mean more volatility, but considers the 15 per cent "manageable".

Attracting tenants from different industries would help, and the flexibility would retain tenants who might otherwise move out.

The idea of becoming a flexible landlord came from feedback from tenants at the developer's Guoco Tower in Tanjong Pagar. Mr Cheng said some tenants reported running out of space; others stopped needing as much as they signed up for.

When GuocoLand bid for the Beach Road site in 2017, the company already knew it wanted to change up its leasing model, he said.

The company also recognised companies' drive to attract and keep talent with amenities, and the changing ways of working and living.

In response to this, Guoco Midtown will have networking lounges, collaborative workspaces, seminar and training rooms as well as facilities for townhall meetings.

This can help tenants "save on absolute rents" as well, because they do not have to build such facilities for themselves, Mr Cheng said.

The development will also be equipped with a sky garden, a 40-metre swimming pool and a jogging circuit to help keep workers engaged.

These amenities will also be open to residents of Midtown Bay, which is part of the development. The 32-storey residential tower with more than 200 units is targeted at "trendsetters who enjoy luxurious living in a vibrant community".

The former Beach Road Police Station, which will be conserved, is also part of the development. It will house F&B and boutique office spaces, suitable for tenants such as hedge funds. There will also be a retail area of 32,290 sq ft.

Taking a leaf from the developer's Guoco Tower in Tanjong Pagar, Guoco Midtown will include more than 170,000 sq ft of landscape and public spaces, and more than 34,000 sq ft of vertical greenery.

GuocoLand and Guoco Group had bid S$1.6 billion, or S$1,706 per square foot per plot ratio (psf ppr) in September 2017 for the plot for Guoco Midtown - a sum perceived as bullish, Mr Cheng acknowledged.

But he said the bid had factored in the "very balanced" pipeline in the supply of office space in the next four to five years, and also the government's move to decentralise business space.

He added that the Guoco Tower project had given the group confidence. The development is now fully let, though it had opened between 2016 and 2017 - a challenging time in the office market.

CBRE's managing director for Singapore Moray Armstrong said about 1.4 million sq ft a year of supply is under construction, including about 22 per cent that is already pre-let. (The average absorption of office space is about 1.5 million square feet a year.)

"From now through to 2022, Singapore's office supply pipeline appears commensurate with the expected level of demand," he added.

JLL said that by 2030, flexible work spaces could make up 30 per cent of corporate commercial property portfolios worldwide.

Source: Business Times, 23 Apr 2019