Developers rapped for misusing industrial space


SOME industrial property developers have been taken to task by the authorities for misusing space in industrial buildings that they developed.

At least two developers have been asked to cease the unauthorised use of industrial space as office space, The Straits Times understands.

Those rapped by the Urban Redevelopment Authority (URA) include Midview Development and Sin Soon Lee Realty. Both set up their office in a strata industrial building they developed.

Industry sources said this practice was not uncommon among small firms, including industrial developers. However, it goes against a URA "60-40" rule which effectively forbids the use of industrial units as pure offices.

The rule stipulates that each strata unit in an industrial development must devote at least 60 per cent of the total floor area to core industrial activities such as manufacturing, assembly and repair workshops or warehouse and storage facilities.

The other 40 per cent may be used for supporting purposes such as ancillary offices, staff canteens and showrooms.

This is meant to ensure that industrial land is used predominantly for industrial activities.

Midview Development has already moved its office out of its 60-year leasehold light industrial development Midview Building, which is located in Bukit Batok.

The firm could not be reached for comment.

Midview Development is also the developer of 60-year leasehold Midview City where the URA last year cracked down on unauthorised use of industrial space by tenants.

It is unclear whether Sin Soon Lee Realty has fully vacated its office in the freehold light industrial building, Shun Li Industrial Complex, in Sims Drive.

Its office appeared unoccupied when The Straits Times visited it last Tuesday, but the company's signboard was still up and the room was sparsely furnished.

When The Straits Times called Sin Soon Lee Realty, a woman who said she was an accounts executive, but declined to give her name, said that the company declined to comment.

She refused to say whether the company had moved or to reveal its new location, if any.

A URA spokesman said: "In the case of unauthorised uses at Midview Building and Shun Li Industrial Complex, we commenced our enforcement actions in August last year after our investigation. We are unable to disclose further details for confidentiality reasons."

Analysts said that in many industrial buildings, particularly those zoned "Business 1" (B1) which indicates light industrial use, it was quite likely that at least 30 per cent of tenants did not meet the "60-40" rule.

Many small businesses are drawn to industrial space as industrial rents can be 30 per cent to 50 per cent cheaper than commercial space rentals.

Demand from traditional tenants of industrial buildings - genuine industrialists - may also have dropped due to the changing face of the manufacturing sector.

The growing number of firms using industrial space as offices has led to calls for a relook of the zoning requirements.

"With less of the traditional hard manufacturing taking place in Singapore, there is a need to re-examine land-use zonings, usage definitions, planning parameters, plot ratio norms and regulations in industrial buildings," Colliers International said in a recent report.

The report called on the Government to "adopt a more flexible stance" in its definition of allowable use of B1 space, to take into account firms that support the manufacturing sector but are sandwiched in between the office and industrial use classifications.

Several other industrial tenants have recently been caught flouting the industrial usage rule.

"Over the past few months, we have received feedback on the misuse of industrial spaces within a number of industrial developments... Enforcement actions have been taken against the units with such unauthorised uses," the URA spokesman said.

These projects include The Alexcier in Alexandra Road, First Centre in Serangoon North,Midview City in Sin Ming Lane, 34 Boon Leat Terrace and One Pemimpin in Pemimpin Drive.

Several units in these projects had been used for commercial uses such as offices, schools, restaurants and retail shops.

URA added that users of the units had been given a "reasonable but definitive timeframe to cease the unauthorised uses".

"Apart from the more recent cases that are still under investigation or appeal, the rest of the unauthorised uses have since ceased," she said. Users can be charged with failing to comply with the "60-40" rule, and may face a fine of up to $200,000 or up to 12 months' jail, or both.

Source: Straits Times, 13 Feb 2013