FACEBOOK is expanding its footprint in Singapore. Talk in the market is that the social media giant is in advanced stages of negotiations to ink a lease for about 70,000 square foot of office space at South Beach Tower. This would be roughly double the space it now occupies at 158 Cecil Street.
Facebook is expected to vacate the Cecil Street premises later this year to move into the 34-storey South Beach Tower, which was completed in the fourth quarter of last year and is awaiting Temporary Occupation Permit from the Building and Construction Authority.
An inking of a Facebook lease at South Beach Tower is still contingent on several conditions being met, BT understands.
Still, the news of a potential leasing deal by the group is being viewed positively in property circles, as it involves an expansion by the social media group in the Republic.
In December, South Beach Consortium Pte Ltd (SBC) indicated an 80-90 per cent commitment rate for the 500,000 sq ft net lettable area (NLA) of offices at South Beach Tower. Market watchers reckon that that figure included potential deals in advanced negotiations - such as that for Facebook. The consortium had also said that it had achieved rents of S$9-12 per square foot a month.
If the Facebook lease materialises, the social networking service would be the building's biggest tenant.
So far, occupiers from a range of industries have been secured - including pharmaceutical giant Sanofi (53,000 sq ft), Rabobank (30,000 sq ft), Bain & Company (18,700 sq ft), professional services firm TMF Group (16,000 sq ft) and Boeing (10,200 sq ft).
"We're certainly seeing a more diverse mix of tenants for Grade A and CBD office space in Singapore," said CBRE executive director (office leasing) Michael Tay. "A variety of occupiers are prepared to move into such buildings, which reduces the reliance on banks - though this cannot make up for the lack of new demand from banks, which continue to be the largest occupiers of Grade A office space in Singapore."
According to CBRE data, the average gross effective monthly rental value of Grade A office space rose 15 per cent last year to S$11.20 psf.
Mr Tay said: "This year, we are forecasting a more moderate increase of no more than 10 per cent, in the face of continued tightness in new office completions until at least mid-2016. However, missing are any big demand drivers; financial institutions - especially those from Europe and the US - are not expanding."
South Beach Tower is part of a 99-year leasehold mixed development that will also have apartments, hotel rooms, retail space and a private club. The club will be housed in the former Non-Commissioned Officers Club building, one of the four conserved buildings in the project. The project's developer, South Beach Consortium, is a joint venture between Singapore property heavyweight City Developments and Malaysia's IOI Group.
Facebook was earlier reported to have explored the possibility of doubling its space within 158 Cecil Street, which is owned by a property fund managed by Alpha Investment Partners, part of Keppel Land.
However, this was not possible due to the high occupancy rate in the 14-storey building, which has about 114,000 sq ft NLA.
Formerly known as Dapenso Building, the property underwent a major revamp several years ago. It bagged the top prize at the 2011 Skyrise Greenery Awards, organised by the Singapore Institute of Architects and National Parks Board.
158 Cecil Street is on a site with 99-year leasehold tenure from 1982.
Source: Business Times, 6 Feb 2015