Aon nears 70,000 sq ft lease at SGX Centre

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[SINGAPORE] The buzz in the Singapore office leasing market continues, with a string of deals either sealed or in advanced stages of negotiations.

Vodafone has leased a 30,000 square foot floor at Asia Square Tower 2. Jardine Lloyd Thompson is said to be nearing an agreement to lease 40,000 sq ft at CapitaGreen, which will be completed on the former Market Street Car Park site by year-end.

At SGX Centre 1 along Shenton Way, insurance broker Willis (Singapore) has signed a lease for 20,000 sq ft, while discussions are in an advanced stage for Aon to occupy about 70,000 sq ft, BT understands.

Despite the wave of office leasing activity, industry observers caution landlords against getting carried away in jacking up asking rents, as not all occupiers are on the expansion trail.

Word in the market is that United States oil and gas major Chevron is evaluating its real estate leasing requirements in Singapore with a view to trimming rental expense. Its existing lease of about 90,000 sq ft at Chevron House in Raffles Place expires towards the end of 2015.

At Asia Square Tower 2, Vodafone's lease for the entire 17th floor means that 65 per cent of the 780,000 sq ft of offices in the tower is now leased. "We have five whole floors left in Tower 2. Three of these floors are under negotiation to three separate whole-floor tenants," said the development's head of leasing, Luke Moffat.

Asia Square Tower 2 received Temporary Occupation Permit (TOP) last September. Vodafone is expected to move to the tower by year-end from Straits Trading Building and Suntec City. DTZ is said to have brokered the telco's lease at Asia Square.

At Tower 1, which was completed in mid-2011, 90 per cent of the 1.26 million sq ft of offices is let.

"Three whole floors are left and negotiations are ongoing with existing tenants that require expansion," said Mr Moffat.

Asia Square's quoting rent for both towers is $18 psf a month - said to be one of the highest for Grade A CBD office space - though whole-floor tenants are being charged $12-13 psf, BT understands.

Meanwhile, at CapitaGreen, an agreement is close to being reached for Jardine Lloyd Thompson to occupy about 40,000 sq ft spanning one-and-a-half floors in the low zone of the 40-storey Grade A office tower.

In addition to consolidating from multiple locations (including One Raffles Quay and Prudential Tower), the risk solutions and reinsurance service provider has catered for expansion.

Word on the street is that gross effective monthly rents for large spaces at CapitaGreen are probably close to $9 psf.

Over at SGX Centre 1, BT understands that insurance brokerage and consulting group Aon is nearing an agreement to lease about 70,000 sq ft that was previously occupied by the Singapore Exchange. The latter has scaled down its presence in the development and moved the bulk of its operations to The Metropolis in Buona Vista.

Aon is expected to consolidate from three existing locations: Mapletree Anson, UOB Plaza 1 and Robinson 77.

It is believed that Aon is likely to pay just under $8 psf a month at SGX Centre 1. JLL is understood to be brokering the deal but declined to comment.

In an earlier transaction, Willis (Singapore) agreed to lease about 20,000 sq ft across two levels in the same tower. It is relocating from 2 Havelock Road.

Meanwhile at South Beach Tower, a deal for just under 20,000 sq ft is on the verge of being inked. The space spans an entire floor in the low zone of the 34-storey office tower. As reported earlier, Rabobank has leased two floors adding up to 26,000 sq ft in the high zone.

Gross effective monthly rentals for a whole floor at South Beach Tower are said to be around $9-10 psf.

In the business park arena, Oracle is said to have signed up for 70,000 sq ft at Galaxis, a development by Ascendas Land at Fusionopolis Phase 5 in one-north. The IT giant is expected to eventually exit Suntec Tower 4, where it has a lease for roughly the same amount of space until early 2016.

Market watchers estimate that Oracle could be paying around $5-6 psf a month at Galaxis. Current transacting office rents in Suntec City are said to be around $8.50 psf for large spaces.

Oracle will continue to operate out of one other location, Technopark@Chai Chee, where it occupies just over 20,000 sq ft.

CBRE is understood to have brokered Oracle's lease at Galaxis, which is expected to receive TOP in the fourth quarter of this year.

Last month, BT reported that Canon is leasing 150,000 sq ft in the development.

Source: Business Times, 29 May 2014