Business parks command strong Q2 leasing demand

20130717-st-biz-pks-command-strong-q2-leasing-demand-pic BUSINESS parks saw robust leasing demand in the second quarter, with tenants signing up for some developments under construction well before completion, according to a report from property consultancy CBRE.

Among them, Fusionopolis Phase 2A has only 10 per cent of space available for lease, after Jurong Town Corporation reserved "a significant portion" of space at the development, the report released yesterday showed. Tenants are also in talks for as much as 20 per cent of leasable space at Fusionopolis Phase 5, 18 months ahead of its completion, said CBRE.

Overall, business parks are reporting pre-commitment from tenants for about 40 per cent of the new supply.

CBRE also noted that about 5.43 million sq ft of leasable space in business parks is expected to be added from now until the end of 2016. The completion of DBS Asia Hub Phase II and Rigel Technology's research and development centre next year will account for most of the supply.

Meanwhile, leasing demand at completed business parks held steady during the second quarter.

The vacancy rate at these parks fell slightly to 6.2 per cent, from 6.3 per cent in the previous quarter, as tenants embarked on their expansion plans.

Samsung took up more space at Mapletree Business City, while biomedical firm Covance expanded its laboratory space at The Synergy, CBRE noted.

Despite the strong pipeline of space in the next four years, the possibility of over-supply remains low due to the pre-commitment level, said CBRE.

In addition, CBRE noted that demand will be driven by companies moving from the central areas towards business parks.

The ample supply of office space over the next few years is also expected to stabilise rents at business parks.

ocheryl@sph.com.sg

Source: Straits Times, 17 Jul 2013

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Business park demand stable, rents unchanged

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DEMAND for business and science park spaces in Singapore remained stable in the second quarter, with a marginal drop in vacancy rate to 6.2 per cent, from 6.3 per cent in Q1, consultant CBRE noted in its latest report.

CBRE attributed the drop in the vacancy rate to the expansion of existing tenants, such as Samsung in Mapletree Business City and biomedical firm Covance in The Synergy.

Pre-commitment levels for the remainder of 2013 stand at 68 per cent, for an estimated net leasable area of 2.15 million square feet.

At least 5.43 million square feet of potential future supply will be available over the next three years as well, out of which about 40 per cent has been either pre-committed or built-to-suit.

This includes two Changi Business Park built-to-suit projects with a 2014 completion date; the 76,000 square feet DBS Hub Phase II; and Rigel Technology's R&D Centre, the leasable area for which has not yet been confirmed.

CBRE's executive director of office services, Michael Tay, said: "Despite the pipeline in the next four years, the pre-commitment level reduces the possibility of an over-supply situation during this period."

The increase in leasable area is also expected to curtail medium- and long-term spikes in business park rents.

Rents are staying unchanged this quarter, at $3.80 per square foot per month for parks outside the central area, such as Science Park and Changi Business Park.

Centrally-located parks like Mapletree Business City, which are now classified as first-tier parks under the new two-tier system, also continue to see stable rents, at $5.30 per square foot per month.

However, with industrial growth and office decentralisation, Mr Tay said he anticipated that rents would grow by around 5 per cent from now until mid-2014.

CBRE observed that, despite tepid demand, landlords were reluctant to slash asking and headline rents, thus keeping factory rents stable.

A similar trend was seen in the investment market, with sellers and developers sticking to their guns in terms of asking prices. As a result, investment value fell, but industrial capital values continued their upward climb.

Capital values for 60-year leasehold and freehold factories and warehouses increased by 2 to 5 per cent, quarter-on-quarter.

Source: Business Times, 17 Jul 2013