In what is believed to be the first leasing deal at South Beach Tower, Rabobank is said to have signed a lease for about 26,000 square feet. It will be moving out of 77 Robinson Road. DTZ is said to have advised Rabobank.
At Marina Bay Financial Centre Tower 3, Booking.com has inked a lease for 45,000 sq ft. It is expected to relocate from its existing premises at Suntec City. CBRE brokered the deal.
BT understands that another recent tenant which has signed up in the building, which was completed last year, is Gunvor. The Europe-based commodity trading group, which provides integrated trading products and logistics services for the global oil and energy markets, is taking 22,000 sq ft.
At Asia Square Tower 2, financial services firm Citco has agreed to lease 11,000 sq ft.
Chris Archibold, head of markets at Jones Lang LaSalle, said the Singapore office market is experiencing strong leasing activity for spaces under 30,000 sq ft, with demand coming primarily from smaller financial institutions, such as fund managers, and business consulting groups.
"Petrochemicals and pharmaceuticals are still strong. So is insurance," he added.
There is also good demand for clinic space, especially from specialists, in locations within 10 minutes' walking distance from hospitals. "In the Orchard area, we're seeing clinics displacing office tenants in some buildings as doctors can pay $13-15 psf (per square foot) in monthly rent, compared with probably $8-10 psf for a typical office occupier," said Mr Archibold.
Word on the street is that vacancies seem to be falling in a number of older CBD office buildings as existing and new tenants absorb space vacated by occupiers who have moved to newly completed projects.
This has led to landlords starting to push up rents. For instance, a year ago, Centennial and Millenia Towers were achieving monthly rents of $8-9 psf. Today, the figure is $10-12 psf.
A seasoned office leasing agent said rents at older CBD office buildings were being driven up by leases for small areas. For instance, in buildings such as Six Battery Road and Tung Centre, signing rents are about $11-12 psf for areas below 2,000 sq ft.
However, for bigger spaces, tenants enjoy lower monthly rental, by about 50 cents to $1 psf.
At Orchard Gateway, serviced office operator Regus is believed to have signed a lease for two floors, adding up to around 12,000 sq ft. The remaining 24,000 sq ft of office space in the development is expected to be signed up soon.
Market watchers believe rents are around the $9 psf mark for Orchard Gateway's office component, which is coming up on the former Orchard Emerald site and is expected to be completed around March next year. Savills is the sole marketing agent for Orchard Gateway.
Opposite Raffles Hotel, where the South Beach Tower is expected to rise by early 2015, rents are said to be nearly $10 psf a month. It will have 34 levels of office space, adding up to about 520,000 sq ft of net lettable area. Floor plates will range from 15,000-19,000 sq ft.
Jones Lang LaSalle, the sole marketing agent for South Beach's office and retail space, confirmed that more than 100,000 sq ft of office space in the development was under negotiations but declined to comment on the Rabobank transaction.
In a report issued this week, Savills said the office leasing market will continue to favour landlords due to the improving occupancy rates of CBD Grade A buildings, currently hovering above 95 per cent.
Net absorption of CBD Grade A office space for the first nine months of this year totalled 958,000 sq ft, slightly shy of the average annual take-up of nearly one million sq ft in the past five years.
"If the momentum in the leasing market continues in the last quarter, the net annual take-up of CBD Grade A office space is expected to surpass 2012's 1.17 million sq ft," it added.
The average monthly rental value for Savills' basket of CBD Grade A office buildings rose for the third successive quarter, increasing 0.7 per cent quarter- on-quarter to $8.48 psf in Q3. Savills said the average monthly rent for AAA Grade office buildings located mainly in the Marina Bay area stabilised at $10.29 psf, while those for AA and A Grade office space climbed to $9 psf and $7.94 psf, respectively.
Source: Business Times, 7 Nov 2013