AUSTRALIA-LISTED Servcorp will launch its fifth serviced office in Singapore for sale today - a 14,000 sq ft space that occupies half the eighth floor of The Metropolis Tower 2 in Buona Vista.
The new serviced office will have 36 fully managed office suites and meeting rooms. It also comes with service facilities ranging from receptionist and secretarial support, to information and communication technology (ICT) infrastructure.
In an interview with The Business Times, Servcorp's chief operating officer, Marcus Moufarrige, said that serviced residences may be a more cost-efficient alternative for companies seeking premium office space amid rising rents for traditional prime offices.
While rents for serviced offices are not necessarily cheaper, the total cost of ownership is, said the son of Servcorp's founder, Alfred Moufarrige.
"In Singapore, the cheapest you can house a person in a traditional office space for - even if it's a shophouse - is $1,450 per month. You can do that in a Servcorp service office for an average cost of $800 per person per month.
"With no downpayment, cost overheads, redundancy of usage of space, or having to employ supporting staff, a Servcorp client can save 30 to 50 per cent of the costs it would take to set up a traditional office space," he said.
Servcorp's serviced office tenants are predominately branch offices of multinational companies which want to have a presence in Singapore, but are unwilling to take the risk on long-term space. Its global clientele includes the likes of Microsoft and Dell. It also leases to small businesses which find it challenging to rent small spaces because landlords generally prefer bigger tenants.
In its latest Metropolis office - the only one with a decentralised location in its portfolio - companies can lease an office from 120 sq ft upwards, from $1,500 a month.
This works out to a hefty $12.50 per sq ft, exceeding rents at even premium and Grade-A office spaces in the central business district of $8-10, but Mr Moufarridge insisted that the amount comprises not just rent, but "serviced fees" for the extensive list of business services it provides.
"We're a technology services company that happens to be renting some property as well. When you take a Servcorp office, you're not just renting space, you're renting fit-out, you're renting people, you're renting technology and a platform that connects to the rest of the world."
So far, 20 per cent of the Metropolis office has been pre-sold.
Given that the area is already known as a technology and bioscience hub, Servcorp is eyeing biotech companies for clients. It also hopes to tailor to start-ups and entrepreneurs looking to be based here, "so that these businesses can do away with the expense and risk of long-term leases or capital expenditure".
Nearby in Buona Vista, JTC charges unsubsidised rents of about $1.6 per sq ft at startup hub Block 71 - a fraction of what Servcorp charges, but Mr Moufarrige, in justifying the disparity, said: "We're that next step after you have come out of the incubator. We're a different product; when you want to go commercial, then you find a Servcorp office."
The company has invested US$50 million into building a global IT network that guarantees almost no downtime. It also has an online platform for clients to book facilities, and has even self-developed proprietary business software programmes.
Servcorp also has serviced offices at Battery Road, Marina Bay Financial Centre Tower 2, Suntec Tower 3 and PSA Building.
The Metropolis, developed by Ho Bee Land, is now almost fully let with anchor tenancies from Proctor & Gamble, Shell, Singapore Exchange and Neptune Orient Lines.
Source: Business Times, 25 Mar 2014