More companies, finding that they may need to scale up and down following business imperatives, are realising that the traditional long-term lease for their office space may hamper this. Or they may want a long-term lease on the space for most of their core operations, but also the flexibility of taking on more space to start a new project.
GuocoLand, taking this into consideration, wants to be more flexible with its office tenants at its S$2.4 billion, mixed-use Guoco Midtown in Beach Road. In this development to be completed in 2022, GuocoLand will set aside 15 per cent of the 650,000 sq ft of net lettable area (NLA) of office space as flexible, adaptable space. This will include two floors for tenants to use to establish "innovation labs" or start-ups. GuocoLand has not decided whether it will run this space or team up with flexible working operators. The developer said the floor plates of the offices are built to be flexible and can be sub-divided, and that it will work with tenants to design and sub-divide the floor space according to their needs. The squarish floor plates range from 27,000 sq ft to 30,000 sq ft in size. The office block has 30 storeys, and a total gross floor area of 770,000 sq ft.
Metro JV acquires Grade-A Tampines office building
Metro Holdings unit Metrobilt Construction has entered a 50:50 joint venture to acquire 7 and 9 Tampines Grande, a premium Grade-A office property. While the purchase price was not disclosed, sources put the figure to be S$395 million. Metro's 50 per cent capital commitment for the investment is about S$45.6 million. Situated in Tampines Regional Centre, the property comprises two blocks of eight-storey office towers linked by an entrance lobby with retail, as well as food and beverage outlets on the ground floor. It has a site area and gross floor area of approximately 86,110 sq ft and 361,660 sq ft respectively. It has a total net lettable area of approximately 288,000 sq ft and has achieved a committed occupancy rate of about 91 per cent. Tenants include conglomerates and firms from the technology, financial services and insurance industries, including Hitachi Asia, Aldwych International, NCR Asia-Pacific, AIA Singapore and Sysmex Asia-Pacific.
Realty Centre in Tanjong Pagar sold for S$148m, below reserve price
Realty Centre, an office building in Tanjong Pagar, has been sold for S$148 million in the year's first commercial en bloc sale, although the figure falls short of the reserve price. The freehold 12-storey office building up for collective sale with a reserve price of S$165 million in January. The buyer is Singapore-listed The Place Holdings, which intends to redevelop the property into a mixed-use commercial and residential tower subject to regulatory approvals. Realty Centre has a land area of about 11,000 sq feet and is zoned for commercial use under the Urban Redevelopment Authority's 2014 Master Plan. It has a plot ratio of 5.6 and a maximum storey height of 35 storeys.
Under the recently announced CBD Incentive Scheme, Realty Centre falls under the Anson precinct. This means that the property is expected to enjoy bonus plot ratios of between 25 per cent and 30 per cent if there is a change of use to either residential and commercial (+25 per cent) or residential with commercial on first storey (+30 per cent).
Three adjoining office units at Peninsula Plaza will be put up for sale in an expression of interest exercise, at a guide price of S$9.29 million. The exercise closes at 3 pm on May 29. The units are located on the 12th storey, with areas of each unit ranging from 1,001 sq ft to 1,776 sq ft. The 999-year tenure units have a combined area of 4,262 sq ft. The indicative price of S$9.29 million works out to S$2,180 psf based on the strata area. Peninsula Plaza is a mixed-use development comprising a six-storey retail podium and a 24-storey office block. It is also a short walk from City Hall MRT interchange station, which serves the EastWest and North-South lines. Prominent landmarks nearby include the National Gallery, St Andrew's Cathedral and the Supreme Court.
Bayer moving to Paya Lebar Quarter; taking up 31,000 sq ft
Pharmaceutical firm Bayer will shift its main office to Paya Lebar Quarter (PLQ) at the end of the year, joining other companies which have taken up space in the mixed-use development such as SMRT. The Business Times understands that Bayer - which is moving from OCBC Centre - is taking up 31,000 sq ft at PLQ. Bayer did not respond to queries from BT by press time. Already at PLQ is SMRT, which has shifted its headquarters from North Bridge Road to PLQ's Tower 3 where it has taken up 97,000 sq ft. BT has also reported previously that IWG's Spaces will have a 52,000 sq ft co-working space at PLQ, while Great Eastern has leased 125,000 sq ft in Tower 3 and NTUC Income, 55,000 sq ft in Tower 2, respectively. Decentralisation activity may increase owing to high rents in the CBD, as this enables costconscious occupiers to reap substantial savings by shifting their non-client facing functions to the city fringe or suburbs.
Office and retail rentals reverse direction, head south in Q1
Rentals of office and retail space reversed direction to dip in the first three months of 2019, owing to uncertainties in the business outlook and continued woes in the retail sector. Going by official figures from the Urban Redevelopment Authority (URA) on Friday, rentals in the central region of Singapore slipped by 0.6 per cent in the first quarter of 2019, in contrast with the increase of 0.5 per cent in the fourth quarter of 2018. This was the first quarterly drop since Q2 2017. Island-wide vacancy fell to 11.8 per cent, from 12.1 per cent at the end of the previous quarter, supported by net absorption of 19,000 sq m mainly taken up by technology firms and co-working operators.
The office outlook remains fairly positive for now. With very decent pre-lease commitments already in place and a tapering supply pipeline, landlords' strong leverage is likely to be maintained. Retail rentals in the central region, on the other hand, weakened by 0.2 per cent in the first quarter of this year, against the growth of 1.2 per cent in the previous quarter. The absorption of the island-wide retail space continues to lag supply. In Q1 2019, the amount of occupied retail space decreased by 14,000 sq m, although more space was also taken off the market with net supply reducing by 2,000 sq m during the quarter
A series of commercial real estate deals amounting to $1.06 billion was inked in the past week, surpassing the total investment volume for the commercial sector in the first quarter of this year. Evia Real Estate and Metro Holdings bought 7 and 9 Tampines Grande, a pair of premium Grade A office blocks from City Developments Limited (CDL) and Alpha Investment Partners for $395 million. Mitsubishi Estate and CLSA entered into a share purchase agreement with a Perennial-led consortium to buy Chinatown Point mall for $520 million, while Realty Centre, an office building in Tanjong Pagar, has sold for $148 million in the year's first commercial collective sale deal. The investment sales market took a breather in the first three months of this year, with total sales staying muted at $4.6 billion, a 21 per cent decline quarter on quarter, and only about 13 per cent of the total annual investment volume last year.
Oxley confirms S$1.025b sale of Chevron House
Property developer Oxley Holdings announced on Tuesday that it had signed a deal to sell Chevron House for up to S$1.025 billion, just 16 months after acquiring the prime office building in Raffles Place for S$660 million. Oxley said that on April 29, it entered into a sale-and-purchase agreement (SPA) with Golden Compass (BVI) for the latter to buy the entire interest in its wholly-owned subsidiary Oxley Beryl, and take over the existing bank loans for an aggregate value of up to S$1.025 billion. Oxley Beryl owns Chevron House, a 32-storey commercial development comprising 27 levels of office space and a five-storey retail podium; the building's existing net lettable floor area (NLA) is about 261,280 sq ft. Oxley's corporate presentation in February revealed that the plan is to increase the building's NLA by 43 per cent to about 374,165 sq ft, subject to approval from the authorities. The S$1.025 billion sale price works out to about S$2,739.43 psf on the increased NLA. The property sits on a site with a 99-year leasehold tenure from December 1989, leaving nearly 70 years on the lease. In Singapore, aside from Chevron House, it is also looking to sell its Novotel and Mercure hotels on Stevens Road.