Category Archives: Office / Retail Space

Major Japanese bank in advanced talks for space in Marina One

DESPITE a generally quiet leasing market, there has been buzz about two big transactions involving major players.

BT understands that The Bank of Tokyo-Mitsubishi UFJ (BTMU) is in advanced discussions to lease about 140,000 square feet of office space at Marina One. It will be moving out of Republic Plaza, where it is the anchor tenant and also one of the oldest in the building, occupying about 150,000 sq ft.

In a separate deal, this one outside the CBD, Johnson & Johnson (J&J) is said to be finalising a lease for at least 170,000 sq ft of business park space at Ascent in Science Park 1 which will be completing this quarter. The lease is understood to be a long-term commitment of 10 years.

The multinational corporation (MNC) is currently based at The Strategy in the International Business Park in Jurong East, where it occupies about 130,000 sq ft. When contacted by BT, a spokesman for Mapletree Industrial Trust, which owns The Strategy, said: “We have not received any notification from Johnson & Johnson on their lease, which expires in 2018.”

However, an analyst said that J&J may have an option to pre-terminate its lease by serving a requisite notice period.

Market watchers suggest that J&J could be paying a gross effective monthly rental of about S$5-S$6 per square foot (psf) at Ascent on a blended basis for the duration of the 10-year lease, compared with about S$3.50-S$3.80 psf it would pay had it chosen to renew its lease at The Strategy. But for the company, the relocation could represent a flight-to-quality to a newer development, with an expansion built in.

“If they remained in The Strategy, there is limited expansion pathway for them,” said a market watcher.

Developed by Ascendas Land Singapore, Ascent is a seven-storey building with a total net lettable area of 490,687 sq ft, of which about 90 per cent is business park space. It is located near Kent Ridge MRT Station and Kent Ridge Park. Ascendas declined to comment on the precommitment rate for the development or about J&J’s lease. The MNC too was mum when approached by BT as was Colliers International, which is understood to have advised J&J.

Back in the CBD, BTMU could be one of the first major office signings at M+S’s Marina One project, say market watchers. When contacted, the bank declined to say where it will be relocating to, but confirmed that it would not renew its lease at Republic Plaza which is due in mid-2017.

“. . . we have reviewed our options and decided to move out of the current premises to a new building. This . . . made the most viable sense for the bank in the longer term – with regards to efficiency of floor plates as well as convenience of location,” said Jenny Lim, BTMU’s head of corporate communications for Asia and Oceania. “We are in the midst of final discussions with the new landlord and thus unable to disclose more details of our move as yet.”

The relocation to a new building involves BTMU, the commercial bank entity under Japan’s Mitsubishi UFJ Financial Group (MUFG) that is currently housed at Republic Plaza. BTMU occupies 13 floors adding up to around 150,000 sq ft at its current premises.

The bank is looking at taking up close to 140,000 sq ft at the new building, and about 1,500 staff will be involved in the move.

While the space it is taking up in the new location is less than what it occupies at Republic Plaza, it does not amount to a contraction of the bank’s footprint or business in Singapore, said Ms Lim. Rather, she said, it reflects the more efficient space usage at the new development, due to bigger floor plates

BT understands that Mitsubishi UFJ Securities, another entity of MUFG and which is also located in Republic Plaza, may join BTMU in migrating to Marina One.

In all, the Marina One development will have 1.88 million sq ft of offices on levels 5 to 30 in two towers. Office floors in the East Tower will range from 35,000 to 43,000 sq ft, while those in West Tower will be 32,000-42,000 sq ft. The two towers will be connected on levels 28 and 29, creating 100,000 sq ft per floor.

It is thought that BTMU could be looking at taking four floors at Marina One. At Republic Plaza – which was completed in early 1996 – floor plates range from around 8,000 to 12,000 sq ft. JLL, which is understood to be advising BTMU, declined to comment.

A spokesman for M+S declined to comment on pre-leasing activity at Marina One.

But industry insiders told BT that gross effective monthly rents for big office occupiers at Marina One would probably be around S$7-S$8 psf. Had BTMU decided to renew its lease at Republic Plaza, it could have expected to pay above S$7 psf, they added.

BTMU’s decision is the latest in a game of musical chairs involving office tenants which began last year when precommitments were inked at Duo along Beach Road (also a project by M+S) and Guoco Tower in Tanjong Pagar – with tenants moving from older-generation premises.

At Duo, Abott has signed a lease for about 100,000 sq ft; it will be consolidating and coming out of three locations – HarbourFront Centre in the Telok Blangah area, VisionCrest along Penang Road and Gateway in Beach Road. MasterCard has inked a 70,000-sq-ft lease at Duo, and is expected to exit Gateway.

Meanwhile, Guoco Tower has clinched Dnb Asia, a shipping and offshore financing solutions provider that is currently housed at the nearby Axa Tower, for a space of about 15,000 sq ft.

“The musical chairs trend already started to emerge last year, although most of the actual vacating of space will happen in 2017 and possibly 2018 because these tenants are precommitting to space in new buildings that will be completed in the second half of this year and early 2017,” said Michael Tay, executive director of office services at CBRE.

Besides attractive rental terms offered by landlords of new developments to select tenants amid the competitive leasing environment, the key drivers for this migration to newer office developments are a flight-to-quality and, in some cases, occupiers consolidating from a few locations.

“There are also tenants that, due to expansion within a building over the years, may have their operations spread in different zones in the building – which is not ideal from an operational standpoint,” noted Mr Tay.

Analysts said that office leasing deals that are brewing are mostly expected to be renewals or relocations, rather than involving new entrants and expansions – translating to little growth, if any, in net demand for islandwide office space. Some foreign banks and tenants in the resources sector are in retreat and the overall weak global economic outlook is also denting office demand. This, coupled with the surge in new office completions over the next year or so, will continue to create downward pressure on rentals.

On a positive note, there are signs that some big occupiers are prepared to move to higher-quality new buildings, incurring capital expenditure – provided the rental level is right, said Mr Tay.

All eyes are now on the the likes of ING, which is also in Republic Plaza, to see if it stays put or moves to a new development. In Centennial Tower, McKinsey & Co is mulling over whether to stay or move.

The World Bank, which is said to occupy about 16,000 sq ft at Marina Bay Financial Centre 2, is being courted by several landlords. The bank is understood to be looking for a bigger space of about 30,000-50,000 sq ft either in the same building or a new project.

Savills executive director (commercial leasing) Marcus Loo said: “There is still keen leasing interest in the market despite the economic uncertainty. However, there is a general sense of disconnect between landlords and tenants’ expectations on rental levels. As a result, decision-making by tenants is protracted.”

Lian Beng to buy Broadway Plaza for S$51.5m

Construction group Lian Beng has inked a deal to buy Broadway Plaza in Ang Mo Kio for S$51.5 million.

Broadway Plaza is a leasehold 5-storey commercial property in Ang Mo Kio Central facing Ang Mo Kio Avenue 6. It sits on a land area of 18,450 sq ft and has a gross floor area of approximately 55,351 sq ft. The property has about 61 years left on its lease.

It bought this as a “strategic investment” for rental returns, Lian Beng said.

It is making the purchase via a wholly owned subsidiary, LB Gold Land, which is buying Broadway Plaza’s holding company, State Rich International Limited, from Yong Khong Yoong Mark.

Singapore’s first family-friendly co-working space opens

Singapore’s first co-working space equipped with child-minding facilities officially opened on Wednesday (Feb 17).

Trehaus, which is located on Orchard Road, aims to give working parents a chance to meet like-minded people and grow their business network, while staying close to their children. Here, parents conduct their business at the Workspace and have the option of dropping their kids off at the Kids Atelier, which offers child-minding services, as well as various lessons and programmes.

Trehaus runs on a membership scheme, which starts at S$350 each month. This is comparable to rates at other working spaces in Singapore. Child minders can be hired for S$15 per hour. The facility can accommodate up to 60 working adults, as well as 30 children.

About 20 people, who include freelancers and entrepreneurs, have signed up. Among them are Ms Valerie Loh and her husband Shang Liang, who run a digital branding and web design company. The couple, who have a three-month-old baby, moved from another shared office space to Trehaus when it began operations in January.

“Whether it’s a serviced office or a co-working space, there aren’t really many networks here that have an environment or culture that welcomes kids,” said Ms Loh. “You feel like you always have to shush your baby or creep around.

“Here, you don’t have that pressure. It’s a lot healthier and more open; people are generally happy that you’re bringing your child around.”

Trehaus co-founder Tjin Lee said the company is eyeing a bigger market: “I’d like to debunk the expectation that this is only for entrepreneurs or for people who have flexi-working or freelance options. What we’re really hoping to do is to bring this as a concept to corporates at large, and we can then really change and impact the way people work.

“If companies understand that formats like Trehaus exist, that you can work and play, and that female employees don’t need to leave the workforce when they have children and know that they can find places to work that are near where their children are, then I think I can make a big difference to these companies.”

“VERY CREATIVE”: JOSEPHINE TEO

The co-working space is also a welcome addition as the Government moves to create more childcare options, said Senior Minister of State in the Prime Minister’s Office Josephine Teo, who helps oversee the National Population and Talent Division.

“I think it’s quite good that the private sector is getting involved in this very creative way,” said Mrs Teo. “I think what we want to do is nurture them and to encourage them to try out the concept and adapt it to different situations.”

The concept could even be brought to the heartlands, she added. “But it is very early days yet. When it finds acceptance in the market, we’ll see what we can do to give it a further boost.”

Perennial hints at changes afoot at Capitol Singapore

Some changes could be afoot at Capitol Singapore after it has been hit with a depressed retail environment. Landlord Perennial Real Estate on Friday (Feb 5) said it is looking at ways to help tenants.

CEO of Perennial Real Estate Holdings Pua Seck Guan, said: “The retail sector is not easy now, because a lot of retailers are faced with the problem of labour shortage and also in this volatile market.

“As a landlord, we therefore have to adopt a strategy to find the right tenant and a win-win rental structure, and some of the rentals we may have to get it on a turnover basis rather than insist on a very high base rent.”

The announcement comes as Capitol Singapore integrated development is edging closer to completion. The 157-room The Patina hotel has been completed, although it has not yet opened its doors. Meanwhile, the luxury Eden Residences expects to receive its Temporary Occupation License by end-February. The retail complex has been opening in phases since May 2015.

Concerns about Capitol’s retail tenants aside, Perennial presented a strong report card for the three months to December at a briefing on Friday, with net profit almost doubling up 93 per cent to S$41.1 million.

Property consultant, Chestertons, said Capitol could get a boost when the hotel starts operating. “One potential catalyst that might come out for Capitol’s retail centre would be the opening of Patina Hotel,” said managing director of Chestertons Donald Han.

“The Patina is almost ready to open its doors and it would welcome high-end or business tourists. So effectively, that could be a crowd puller to be able to support some of the high -end offering in Capitol. This year might potentially might see some footfall traffic. I think it might see higher occupancy settling in, as the year moves on. ”

Turning to its other Singapore properties, Perennial said it hopes to start selling office space and medical suites at TripleOne Somerset sometime in the second quarter, and it is awaiting final approval to do the same for AXA Tower.

Perennial’s other properties in Singapore include Chinatown Point and CHIJMES. The Singapore properties account for 21 per cent of the group’s total assets, behind China whichs accounts for around 73 per cent.

Source : Channel NewsAsia – 5 Feb 2016

Lack of free parking has led to slow business: Parkland Green tenants

Less than two years after it was launched to provide more recreational options at the popular East Coast Park, some of Parkland Green’s tenants are seeing business take a hit after the authorities imposed parking charges at the cluster last year, with the situation compounded by factors such as the haze and a lack of publicity.

Parking at the area’s nearest carpark was free when the development opened in September 2014, but last July, the National Parks Board (NParks), which manages the space, began imposing charges for parking. Soon after, footfall and earnings tumbled, said some tenants.

At Atmosphere Bistro and Bar, sales have fallen 10 to 15 per cent since visitors started being charged for parking, said its director Chiam Wee Leong, 32.

Ms Didi Gan, 29, who co-owns Pick Me Up Cafe, said business has plummeted by 40 per cent since January last year, with charged parking a contributing factor.

“A lot of people also gave us phone calls (and) were unhappy … that they have to (pay) to go to the park,” said Ms Gan. Her cafe used to open for lunch, but stopped doing so because of poor business.

HAZE, ECONOMIC CLIMATE ALSO CONTRIBUTING FACTORS: NPARKS

Parkland Green, together with another development Marine Cove, was developed by NParks as part of efforts to improve amenities at the park, which attracts more than seven million visitors a year.

Responding to TODAY’s queries, NParks’ director of parks Chia Seng Jiang said some tenants had noted that business slowed in the second half of last year compared with the initial months of opening.

“This could be attributed to a combination of factors, including the haze situation, cyclical nature of business operations, competition from new businesses in the vicinity that have opened more recently, as well as the overall weak economic climate,” Mr Chia said.

Indeed, the haze that blanketed Singapore last September and October was cited by some Parkland Green tenants — which total 11 — as contributing to the sluggish business.

“Due to the haze period, there (was) a drastic drop (in business) because we are by the seaside,” said Mr Chiam.

Other factors highlighted include insufficient publicity. Ms Gan felt publicity was much better for other parks, but particularly not so for East Coast Park.

Mr Chiam acknowledged that while media coverage during Parkland Green’s opening led to a surge in visitors, “after some time, there (are) always new places to (visit) in Singapore”.

Addressing efforts on the publicity front, NParks’ Mr Chia said the agency has been working with tenants to publicise their activities and promotions on various platforms, including the NParks website.

It has also engaged tenants at events such as the Parkland Green Blogger’s Trail, which gave tenants a platform to showcase their offerings, he said.

Mr Raj Patro, 50, owner of Patro’s Sports Bar and Restaurant, said his business was affected by the haze last year, but has picked up since. Adding that he felt the parking charges are reasonable, he said: “It will be very good if you can make it (a) free car park, but again, people (could) misuse it.”

Ultimately, Ms Gan said the decision to renew her lease would hinge on whether the crowd picks up and if publicity efforts are stepped up.

A 28-year-old manager at one of the cafes, who declined to be named, echoed this view, saying: “We are trying to turn the tide around. But if (business) is continuing (this way), I don’t think we are continuing (our lease).”

Elsewhere in East Coast Park were also signs of sluggish business. Some tenants at Big Splash said that despite free parking being offered during certain hours on weekdays, business remained slow. Free parking was implemented last September from midnight to 5pm every weekday, except on public holidays.

Mr Vincent Teng, 42, who owns Sunrise Bistro and Bar, noted that the hours in which free parking is offered are not the eatery’s peak hours. He suggested that free parking be offered from 6pm to 10pm instead to draw the dinner crowd.

His restaurant has been making a loss since it began operations in December 2014, added Mr Teng, citing the high rent, low footfall and the haze as among the factors.

At Raintree Cove, business has also been hit. East Coast Prawning has seen business slide by 30 per cent from about five months ago, said Mr Tan Ah Chai, 51, a staff member.

“With the economic situation, business will drop,” Mr Tan told TODAY.

Source : Channel NewsAsia – 2 Feb 2016

Long Beach, other East Coast Park outlets to go by next February

Businesses at the sports and recreational development Raintree Cove — home to the popular Long Beach Main Seafood Restaurant, a fixture at East Coast Park — will be putting up their shutters by next February.

TODAY has learnt that the lease for the space lapses on Feb 28 next year, and tenants are expected to make way for the land’s development. Master tenant Raintree Cove was granted a final extension by the Singapore Land Authority (SLA) last March, “pending commencement of the development”, an SLA spokesperson said in reply to TODAY’s queries.

Long Beach and fast-food chain Burger King, which opened there in 1992 and 2006 respectively, are among the development’s long-standing sub-tenants. A Lorna Whiston preschool is also housed there. The National Parks Board plans to take over the site in March next year and will share details of the development plans when ready, said its director of parks Chia Seng Jiang.

This will mark the latest in a series of development works at East Coast Park, which draws more than seven million visitors a year. The redevelopment of another enclave, Marine Cove, which has been shut for nearly four years, is expected to wrap up by the middle of this year.

MORE SPORTING FACILITIES OR RETAIL SPACE?

Property analysts interviewed by TODAY offered a range of possibilities for the Raintree Cove site.

Century 21 Singapore chief executive officer Ku Swee Yong surmised that the area could see more sporting facilities, such as for outdoor sports. Noting the Republic’s lacklustre retail conditions, he added: “I don’t think it will be a significant new retail or F&B concept.”

Creating more retail space, he said, would also dilute the crowd from the offerings elsewhere in the park.

Property consultancy Chris International’s director Chris Koh disagreed, however, believing that there is still space at the park for more F&B and retail developments.

It would make commercial sense for the site, which has established a reputation for its F&B offerings, to continue as an F&B-centric space, added Mr Nicholas Mak, head of research and consultancy at SLP International Property Consultants.

He said demolishing the existing development would be necessary only if there are plans to increase the floor area or reconfigure its layout, or if the buildings are too old, among other factors.

Analysts also noted that if more recreational options were to be introduced, having adequate parking spaces would be an important consideration.

Given that parking during peak seasons and weekends was “already an issue”, Mr Ku cautioned against setting up more retail and F&B spaces unless parking and public transport to the area are improved.

SITE HOLDS MEMORIES FOR CUSTOMERS, STAFF

The Raintree Cove site had initially been awarded to the firm from Sept 1, 2006 to Aug 31 last year, through an open tender.

While the expiry of the lease is a year away, some sub-tenants are already sad about having to leave.

Lorna Whiston Schools’ regional director of marketing and business development Esther Wong said: “(Raintree Cove) has held a lot of memories for our children, parents and staff.”

Some parents had decided against enrolling their children in the preschool because of the possibility of relocation, she noted.

The preschool is now on the lookout for a new location in the east and will share details when it is confirmed, said Ms Wong, who added that finding an ideal space was a challenge.

For the F&B establishments, the possible impact of the move on their customer base was a concern. Mr Jack Kang, Ju Shin Jung East Korean Charcoal BBQ Restaurant’s business development manager, said: “The most significant impact will likely be on our regular customers and weekend customers.”

The restaurant has not found an alternative location. “To find a suitable place may need more time,” said Mr Kang. Burger King’s management said the fast-food chain would review its options once the discontinuation of its lease is confirmed.

The patrons TODAY spoke to were unaware of the expiry of the area’s lease, and most were sad to hear the news. Madam Gina Wee, 48, a resident of nearby Marine Terrace, visits East Coast Park every week. “There are some feelings attached after so many years. It’s just the convenience because we live opposite, and it’s near the beach,” she said.

The Burger King outlet there has also become a well-known “meeting point” for many, said business owner Roszanah Abdul Salim, 34. “This is like the identity of East Coast Park,” she added.

Legal counsel Chan Chiew Fai, 40, who has taken his foreign colleagues to Long Beach over the past decade, said the restaurant “has always been a classic if you want seafood”. “It’ll be a shame if we no longer have this place to come to,” he said.

Nevertheless, other dining options abound, said Madam Karen Shee, 52, who visits Long Beach every other year. The insurance professional felt that Raintree Cove required some development: “Some of the structures are quite old and are not really organised.”

Source : Channel NewsAsia – 10 Feb 2016

Empty offices and falling rents spell further gloom for landlords

Office buildings in the city fringes may be increasingly left vacant as tenants seek the opportunity to move into Grade A premises in the Central Business District (CBD) with rents weakening amid an onslaught of incoming supply.

Pundits, such as Bloomberg columnist Andy Mukherjee, have blamed the weak office market here on a “fundamental miscalculation” on the part of some Singapore developers that had “misplaced optimism” that China would sustain its rapid pace of its growth and pull the rest of Asia along.

With another 7 million square feet of new office space under construction at a time when businesses are holding back expansion plans, rents in Singapore will continue to tumble, analysts warned. Mr Nicholas Mak, executive director at SLP International Property Consultants, has forecast a 10 to 15 per cent fall in rents this year, accelerating from the 6.5 per cent decline last year.

“In the past six months, we have already seen a noticeable slowdown in demand (for offices). The financial services industry has been the main demand driver but that has been the biggest weakness in the last few years,” said Mr Desmond Sim, head of CBRE Research in Singapore and Southeast Asia.

As of the end of last year, Grade A office rents in the CBD cost between S$8.00 and S$12.80 psf, according to a report by property firm Knight Frank Singapore. Those outside the CBD but still within Singapore’s central areas fetched S$7.50 to S$11.90 psf, while rents for offices in the city fringes and suburbs ranged from S$4.40-S$8.10 psf.

Competition for tenants is intensifying, with landlords offering attractive renewal terms to retain existing tenants, said Ms Louise Toovey, director of office agency at Knight Frank.

They are also more willing to extend competitive rental rates to new tenants and offer additional incentives such as a rent-free period within the lease, she added.

The landlords’ willingness to lower rents have already resulted in several flight-to-quality cases. Online travel company Expedia vacated its Hong Kong Street premises for space in the recently-completed South Beach Tower. Immigration services provider Fragomen also moved into South Beach Tower from Haw Par Glass Tower, real estate consultancies Colliers International and Knight Frank reported. But with fewer companies expanding and fewer new companies being set up, this phenomenon comes at the expense of older, less attractive buildings.

“Flight-to-quality will definitely leave voids in other markets. The non-beneficiaries are buildings that are functionally-challenged – smaller floor plates, pencil-thin buildings or very, very aged buildings. This might encourage some sort of regeneration to keep these buildings up-to-scratch. Regeneration could even come in a change of use,” Mr Sim said.

This also means that islandwide office vacancy rates will likely soar past the current 9.5 per cent, as almost 4 million sq ft of the estimated 7 million sq ft of supply is due for completion in the second half of this year.

Signs of rising vacancy are clear, analysts said, citing Tanjong Pagar Centre as an example of slower demand for offices. At 290 metres, the prestigious mixed-use development will be Singapore’s tallest building when completed later this year, but it has secured barely 10 per cent of lease commitments for its 890,000 sq ft of office space. Other major developments set to enter the market include Marina One and DUO Tower, which will add more than 2 million sq ft of office space.

In response to TODAY’s query on the take-up rates of Marina One and DUO, developer M+S would only say that it is seeing “healthy interest” and “various tenants have pre-committed” to both projects.

Property analysts said that the days of quick supply absorption are well over and the current weak market could take as long as five years to recover even as land supply for commercial development has been scaled back.

“It is bad enough. Supply is at record high this year at a time when companies are downsizing and merging,” said Mr Ku Swee Yong, chief executive of property firm Century 21.

“Good or bad market, there should have been a controlled but steady supply of land. Controlled, meaning the developers shouldn’t have been so excessive. The Government may have been excessive in releasing land through GLS (Government Land Sales programme), but its premise is that with more land, there can be better control of prices,” he added.

CIMB Private Banking economist Song Seng Wun said that regardless of macroeconomic conditions, the Government has taken a deliberate approach to have supply exceed potential take-up.

“Today’s demand may be softer than earlier projected, but this is part and parcel of any cyclical market. It’s always difficult to predict,” he said.

Source : Channel NewsAsia – 1 Feb 2016