Tag Archives: Office Space

Singapore’s prime office rents to bottom in 2018: Knight Frank

A FLIGHT-TO-QUALITY among office occupiers is weighing down on rents and occupancies at older Grade A office buildings, where more space will be freed up as these tenants move into new prime offices.

This is giving rise to a “two-tiered performance” in the prime office market, with Grade A offices seeing steeper declines in rents than the so-called “Grade A-plus” offices in the coming quarters. Average office rents will continue to fall before bottoming out in 2018, property consultancy Knight Frank projects.

These Grade A-plus offices refer to newer buildings with better specifications in the prime office market.

With the downside risk in office rents already well-documented ahead of looming completions of massive projects, market observers have started speculating when the bottom will be reached.

But some analysts are expecting the bottom to arrive sooner. DBS Group Research and Religare are tipping a bottom in the second half of 2017; Maybank Kim Eng has projected a bottoming-out of office rents over the next five to six quarters, which suggests Q4 2017 to be the earliest for that to happen.

Knight Frank head of office Calvin Yeo said: “Competition for tenants will be rife, particularly among buildings vying to backfill vacancies from tenants relocating to quality (spaces) over the upcoming quarters.

“Buildings with significant net lettable area (NLA) due for lease renewal from now till 2018 will continue to be under threat of losing tenants to quality buildings,” he added.

During the third quarter, Grade-A office space in the Raffles Place/Marina Bay district saw the largest quarterly decline of 2.9 per cent in monthly gross effective rents (which exclude fit-out period but include rent holidays and service charges) to S$8.20-8.70 per square foot (psf). This is followed by a 2.7 per cent fall for Grade A office spaces in the Marina Centre and Suntec City areas to S$8.10-8.60 psf.

The pursuit of tenants by upcoming office projects in recent quarters has been at the expense of older Grade A buildngs, which will see some tenants moving out soon when those swanky new buildings are completed.

The Business Times had earlier reported a slew of pre-lease commitments inked in new projects. ING, which now occupies 70,000 sq ft at Republic Plaza, is close to securing a similar amount of space at Guoco Tower in Tanjong Pagar Centre. Itochu Singapore, also currently at Republic Plaza, is also taking up 28,000 sq ft at Guoco Tower.

Communications agency Dentsu Aegis Network, which now operates from 77 Robinson Road and has member firms in several other locations, is said to be finalising a lease for about 90,000 sq ft at Guoco Tower.

Cybersecurity company Palo Alto Networks is moving out of its 20,000 sq ft of space at Millennia Towers to take up some 36,000 sq ft at Guoco Tower.

Amadeus, a global IT solutions provider for the travel industry, now occupies over 20,000 sq ft at Parkview Square in North Bridge Road and is said to be taking up a lease for 36,000 sq ft at Guoco Tower.

Swiss private bank Julius Baer, which has inked a lease at close to double-digit rent for a “high density floor” spanning 100,000 sq ft at Marina One, is slated to give up its 72,000 sq ft of space spread over two floors at Asia Square Tower 1.

“Upcoming vacancies in Grade A buildings will increase in the next two years as these tenants relocate, and put pressure on rents as a result,” Mr Yeo said.

A skyscraper index released by Knight Frank this month, which tracks rental performance of commercial buildings over 30 storeys high, showed that prime office rents on the upper floors of Singapore skyscrapers are the eighth most expensive globally.

Asia-Pacific cities saw the highest rental growth, with towers in Shanghai recording the strongest growth in the world of 7.6 per cent in the first half, followed by Sydney, Hong Kong and Taipei. Singapore bucked that trend with a 7 per cent drop.

CLSA unit said to be doing due diligence on 77 Robinson Rd

CLSA Capital Partners is said to have been selected to do exclusive due diligence for the purchase of 77 Robinson Road.

The pricing is believed to be above S$530 million, or slightly above S$1,800 per square foot based on the net lettable area (NLA) of nearly 293,270 sq ft.

Formerly known as Singapore Airlines (SIA) Building, the 35-storey office tower is on a site with 99-year leasehold tenure that started on Feb 18, 1994; the balance lease tenure is about 76.5 years.

What is interesting about CLSA being picked for exclusive due diligence is that it was an earlier CLSA-managed fund that had sold the office tower to the current owner – SEB ImmoInvest fund, which used to be managed by the former SEB Asset Management, which was acquired by Savills Investment Management in September last year. The earlier CLSA fund had sold 77 Robinson Road in April 2007 for S$526 million or S$1,783 psf based on a slightly larger NLA of around 295,000 sq ft for the property at the time.

Word on the street is that in a recent expression of interest exercise for 77 Robinson Road, at least one other party – tipped to be either CapitaLand or its unit CapitaLand Commercial Trust (CCT) – offered a higher price than CLSA, apparently around S$1,850 psf. However, it seems CLSA was the only party agreeable to the vendor’s preference for an outright asset sale instead of a sale of shares in the special purpose vehicle (SPV) that owns 77 Robinson Road.

An outright purchase of the building would attract the usual buyer’s stamp duty of up to 3 per cent – much higher than the stamp duty rate payable on share purchases, of 0.2 per cent of the net asset value or the market value of the company, whichever is higher. Hence a potential buyer looking at an asset purchase rather than a share purchase in an SPV would typically adjust its price downwards to factor in the higher stamp duty expense.

Moreover, CLSA Capital Partners’ thorough knowledge of the asset, positions it well to conclude a swift deal, which is probably what the vendor is also eyeing, say market watchers.

The earlier CLSA-linked fund that sold the building in April 2007 had acquired it 10 months earlier, in June 2006, for S$343.88 million or about S$1,165 psf, from Singapore Airlines.

CBRE is said to have conducted the recent expression of interest on behalf of Savills Investment Management on the property which closed last month. It declined to comment when contacted by The Business Times.

77 Robinson Road’s maximum development potential has been tapped. Under the Urban Redevelopment Authority’s Master Plan 2014, the site is zoned for commercial use with an 11.2+ plot ratio (ratio of maximum potential gross floor area to site area).

Nevertheless, there may be scope to do some asset enhancement work on the property, presenting potential upside for a new owner, say observers. Among other things, some of the car parking space may be converted to commercial use: the building currently has 180 car parking lots. In addition, some of the air handling units could be decanted to free up spare GFA. There is also scope to spruce up and reconfigure the entrance lobby and upgrade common area.

One negative factor for 77 Robinson Road is that Dentsu, a major tenant, is expected to exit the building; its parent Dentsu Aegis Network is said to be finalising a lease for about 100,000 sq ft at the nearby Guoco Tower. The group will move out of several locations on the island, according to market talk.

110 Robinson Rd sold at S$45.1m to Indonesian tycoon Tahir

A STRING of commercial property transactions has taken place recently.

These include a 12-storey freehold office block at 110 Robinson Road, owned by OCBC, which has sold it to Indonesian tycoon Tahir. The sale will be completed in three months, a spokeswoman for the bank said when contacted by The Business Times.

The price is understood to be S$45.1 million or nearly S$3,169 per square foot based on the net lettable area of 14,233 sq ft. The property is between Finexis Building at 108 Robinson Road and Robinson 112.

BT reported earlier that Mr Tahir was the highest bidder.

Cushman & Wakefield conducted the tender for OCBC. “The tender, which closed on July 26, drew a handful of bids,” said Shaun Poh, executive director of capital markets at C&W.

While most observers would consider the S$3,169 psf that Mr Tahir is paying for 110 Robinson Road to be bullish, Michelle Lek of Quillion Global, who acted for Mr Tahir in the transaction, said the property presented a “rare opportunity to acquire a freehold office building with a Robinson Road address for under S$50 million”.

Also changing hands are six of the nine strata retail units on the second level of Holland Road Shopping Centre – along with an industrial unit at 211 Henderson – offered at a tender conducted by CBRE and which closed last month.

Four adjoining strata office units at The Adelphi, a 999-year leasehold property near City Hall MRT station, are being sold for S$20.7 million or about S$2,365 psf on the total strata area of 8,751 sq ft. The buyer is believed to be the Singapore Academy of Law (SAL).

A body established by Statute, SAL is the promotion and development agency for Singapore’s legal industry, tasked with the vision of making Singapore the legal hub of Asia.

SAL is currently located in the Supreme Court Building next to The Adelphi. When contacted, the Academy said last Friday that it is looking at the purchase of office space close to the Supreme Court. “The move will enable SAL to house its operational units at its own premises instead of paying rent to the Supreme Court. The SAL secretariat will also share our plans and ideas with our committee members in the coming months. More details will be announced by Chief Justice Sundaresh Menon in his Opening of Legal Year Speech in January 2017.”

The four units are being sold by a party who had bought them in 2011, partly for own use and partly for investment.

CBRE confirmed it brokered the deal but declined to comment further.

Over at the freehold Holland Road Shopping Centre, various members of the Lim family behind Lim’s Arts and Living have picked up five retail units. The units are part of nine units on the second level of the four-storey mall that were put up for tender by CBRE on behalf of their owners, two companies controlled by the Lim family. A sixth unit has been sold to an unrelated party.

The six units, with sizes between 237 sq ft and 732 sq ft, were transacted at S$4,346 psf to S$5,403 psf. Absolute prices ranged from S$1.12 million to S$3.95 million. The balance three retail units will be put on the auction block jointly by CBRE and Colliers at the latter’s auction on Sept 21 at Amara Singapore in Tanjong Pagar.

When contacted, Sammi Lim, director of investment properties at CBRE, said the tender, which closed on Aug 23, was “open to participation by anybody including the (Lim) family members”. All six units that have been sold went to their respective highest bidders.

Ms Lim added that the three unsold units to be auctioned drew some bidders but they had packaged their offers together with some of the other six units that were sold. “As a result, the owners decided to offer them at a separate auction,” she added.

The August tender also included a 4,962 sq ft strata freehold industrial unit on the second level of 211 Henderson, which has also been sold for S$2.98 million or S$600.56 psf, Ms Lim revealed. The buyer is not linked to the Lims.

ARA said to clinch deal to purchase Capital Square office tower stake

ARA Asset Management Ltd has won the bid for a stake in Singapore’s Capital Square office tower in the city’s central business district, according to people familiar with the matter.

ARA, which is listed in Singapore, is buying the 50 per cent stake in the building that was put up for sale last year by Alpha Investment Partners, said the people, who asked not to be identified because the process is private.

The purchase will be concluded by month-end, one of the people said, without disclosing the price of the deal.

The 16-story prime office building in the Raffles Place financial district was expected to fetch about S$2,500 per square foot, valuing the 50 per cent stake at roughly S$415 million, according to an estimate from Donald Han, a Singapore-based managing director at real estate broker Chestertons.

The transaction will add to a recent spate of deals in Singapore’s business district as falling rents and a large supply of prime space have pushed valuations lower.

The tower, whose tenants include Morgan Stanley, Bloomberg LP and Citigroup Inc, was bought by Alpha and insurer NTUC Income in 2011 from Munich Re for S$889 million, or about S$2,300 per square foot.

ARA declined to comment in an e-mailed statement.

Capital Square, which is spread out over 388,215 square feet, was built by developer Keppel Land and completed in 1998.

CBRE Group Inc and Jones Lang LaSalle were appointed to market Capital Square, they said in a joint statement in April 2015.

Singapore high-rise office rents decline by 7% as demand slows

Singapore landlords are paying the penalty for a slowing economy. Alone among the world’s major cities, the cost of renting an office with panoramic views is falling as supply outstrips demand.

Annual rents on the upper floors of Singapore’s skyscrapers fell 7 per cent to about US$775 a square metre in the first six months, according to a 23-city index compiled by Knight Frank LLP.

The biggest increase was in Shanghai, where rents climbed 7.6 per cent to US$774. In Hong Kong, the most expensive market, rents rose by 5.9 per cent to US$2,996 a square metre, the broker said.

“There’s a classic imbalance in the Singapore market,” said Will Beardmore-Gray, head of Knight Frank’s tenant representation and agency business.

“They had relatively high supply and this has been exacerbated by a poor-performing economy and over development.”

Vacancy rates in Singapore were 9 per cent in the second quarter, compared with 3.3 per cent in Shanghai, Knight Frank data show. The city-state’s economy will shrink 0.1 per cent in the third quarter, according to a survey of 26 economists conducted by Bloomberg News in the week through Sept 13.

Demand for Shanghai office space has been lifted by the technology and creative industries, Mr Beardmore-Gray said. The city has created 300,000 jobs in those sectors since 2009 and is expected to add 100,000 more by 2020, he said.

Manhattan skyscraper rents increased 1.9 per cent to US$1,701 per square metre during the first half, the second-highest in the index, while those in Tokyo and the City of London district were unchanged at US$1,610 and US$1,226 respectively.

Marina One gains from ‘flight to efficiency’

PRE-COMMITMENT leases and rents for upcoming prime offices are picking up as occupiers are warming to these upcoming swanky buildings with large floor plates in a “flight to efficiency”.

Swiss private bank Julius Baer has signed a lease at close to double-digit rent for a “high density floor” spanning 100,000 square feet at Marina One. Julius Baer is slated to give up its 72,000 sq ft of space spread over two floors at Asia Square Tower 1 when it moves into Marina One, which will be completed next year.

At another integrated project, Tanjong Pagar Centre, a recent flurry of office leases inked has raised Guoco Tower’s pre-commitment leases to over 70 per cent for its 890,000 sq ft of prime Grade-A office space. This signals a remarkable pace since January when the pre-commitment level was only 10 per cent.

Effective rents at Guoco Tower have also ranged from S$7.50 per square foot per month (psf pm) to over S$10 psf pm, according to sources.

Developers of Marina One and Tanjong Pagar Centre, M+S and GuocoLand respectively, declined to comment on their leasing deals nor offer rental details.

But BT understands that ING, which now occupies 70,000 sq ft at Republic Plaza, is in advanced negotiations for a similar amount of space at Guoco Tower.

Sources also said that Guoco Tower had of late secured tenants such as Palo Alto Networks, which is moving out of its 20,000 sq ft space at Millennia Towers to take up some 36,000 sq ft at Guoco Tower.

Itochu Singapore, currently at Republic Plaza, is taking up 28,000 sq ft at Guoco Tower, while Amadeus, a global IT solutions provider for the travel industry that now occupies over 20,000 sq ft at Parkview Square in North Bridge Road, is said to be taking up a lease for 36,000 sq ft at Guoco Tower.

Meanwhile, the new UIC Building has just secured its first pre-commitment lease from JustOffice, which will open serviced offices there spanning 40,000 sq ft.

Such steady absorption marks good news for the market amid the completion of some 3.5 million sq ft of new office space within the next 12 months. But market watchers note that effective rents for most leases inked are still in the single-digits for prime Grade-A office in the CBD after factoring in incentives such as rent-free periods.

“With economic uncertainties and businesses not growing, rents will be kept in check,” said Calvin Yeo, head of office at Knight Frank. Recent leasing activities have been driven by upcoming lease expiries, which will soon free up a lot of secondary space especially in older buildings.

Data from Cushman & Wakefield shows that the weighted effective rents in Marina Bay area stood at S$9.56 psf pm in the second quarter, a 27.7 per cent fall from the Q1 2015 peak, while that in the Shenton Way/Tanjong Pagar area was S$7.65 psf pm, about 10.1 per cent below the Q1 2015 peak.

Cushman & Wakefield research director Christine Li observed that over the last three decades, weak office absorption seems to happen only when there is a crisis. “In the absence of an external shock, the office absorption tends to be quite stable despite periods of high office supply. This could imply that the underlying demand for office space in Singapore is still healthy, and the city state always has the capacity to absorb the supply over time.”

With office tenants relocating from older buildings into newer and more efficient ones, CBRE executive director for office services Michael Tay projects a rental trend divergence.

While rents in new buildings will edge up, older buildings will have more competitive rents in the next 12-18 months, Mr Tay said. Commenting on Guoco Tower, he noted that its retail, hotel and F&B offerings as well as a direct link to the MRT are attractive to tenants.

Large floor plates in new developments are a draw for companies seeking workspace flexibility and efficiency, industry players noted. Duo Tower, an M+S project, offers the largest floor plate in the Bugis micro-market of up to 31,000 sq ft; Guoco Tower’s column-free floor plates span 27,000 to 30,000 sq ft.

Marina One’s typical floor plates range from 34,000 to 40,000 sq ft – among the largest available in Marina Bay.

There are two high density floors on the 28th and 29th floor of Marina One, measuring some 100,000 sq ft each and 170 metres long. Offering good views of the sea, each high density floor is able to accommodate more than 2,000 people.

This offering follows closely the popularity of “superwide” office spaces spanning 100,000 sq ft or more – the horizontal equivalent of the supertall high-rises – that have sprouted across Manhattan. These “superwide” office spaces are untested in this part of the world, with Marina One probably the only prime Grade-A office building in Asia to have high density floors.

But its success could stoke interest among other developers to provide such offerings in the future, said M+S CEO Kemmy Tan. So far, enquiries for such vast floor plates stem from global companies across sectors.

“These leasing activities are not just a flight to quality but a flight to efficiency,” Ms Tan said. “The larger floor plates allow companies to be more efficient in their space planning instead of straddling over several floors.”

In M+S’s last official update in June, signed leases and those under documentation exceeded 550,000 sq ft, out of Marina One’s total prime Grade-A office space of 1.88 million sq ft.

Ms Tan pointed out that recent leases inked for new developments are not just a case of companies playing musical chairs but a reflection of “green shoots” in the office market, with some companies “upsizing” their operations as opposed to others that are reportedly shrinking their office space and headcount.

Upsized, stylish and going niche: Co-working spaces bloom in Singapore

With its lavish interior designs and custom-made furnishings – including Italian hand-dyed rugs and handmade lamps sourced from New Zealand – The Great Room could be mistaken for the lobby of a brand new boutique hotel, instead of a co-working space.

And that is what the founders set out to achieve.

“This luxurious design concept came from observing how people like to meet in hotel lobbies. There’s a certain energy about hotel lobbies, almost like a sense of something purposeful or exciting is going to happen, and we want to replicate that,” chief executive officer Jaelle Ang, an ex-hotelier with training as an architect and artist, told Channel NewsAsia.

Officially launched two months ago, the 15,000-square-foot space, which overhauls the typical industrial chic image associated with most co-working spaces, is perhaps a reflection of how shared offices in Singapore have evolved since the sector’s first entrant Hackerspace.SG nearly seven years ago.

Then, the concept of having multiple companies or individuals sharing the same working environment was innovative and untested, but there are about 30 co-working spaces around the city-state now, with nearly one-fifth located in the Central Business District (CBD), according to figures released by property services and investment group JLL in July.

Experts say a host of supportive factors have facilitated the mushrooming of such facilities, including a thriving start-up scene in Singapore, as well as willingness from developers and landlords to partner co-working operators amid a softening commercial property market.

NEW ENTRANTS GOING NICHE

At The Great Room, which takes up the entire 10th level at One George Street, members can pick and choose their workspace from a variety of options including hot desks and private offices.

But eye-catching hardware isn’t the only factor that founders of The Great Room are banking on.

“Design can always be copied so we cannot rely on that. Our intent is to be a hospitality-inspired workspace,” said chief financial officer Yian Huang, adding that the team organises frequent business and social events such as its “Lunch & Learn” sessions which dish out advice on help available from government agencies, and curates its members to ensure a well-fitted community.

Three-week-old Collision 8 is the other new kid on the block, which boasts of having top-of-the-line workspaces alongside paranomic views of Boat Quay and Clarke Quay. On top of that, the 8,600-square-feet space, housed within High Street Centre, also runs on a “private member” concept.

“We have a set of questions to assess members based on their desire to innovate and collaborate,” said co-founder Michelle Yong, who is also the fourth-generation leader of homegrown construction firm Woh Hup. “We want to see if our members have the mindset of wanting to do something different, and preferably in collaboration with others.”

Inspired largely by her own partnership with co-founder Mr John Tan who is a serial entrepreneur and partner at two micro venture capital funds, Ms Yong wants to replicate an environment where “like-minded people” from varying backgrounds can come together.

“I started looking at this segment because the residential market has been pretty subdued and I was in search of new growth opportunities. I thought about targeting the healthcare professionals, given how crowded the co-working space is, but John suggested bringing together his investor community and my traditional corporate connections,” Ms Yong said. “So we believe in being an expert in one area while trying to find experts in other areas to piece together the best value chain.”

Meanwhile, Trehaus, which opened in February, is Singapore’s first shared office with child-minding facilities. The concept of the space, which houses workspaces such as hotdesks, dedicated desks, private offices and meeting rooms, as well as a children’s play area manned by trained facilitators, stemmed from co-founder Rachel Teo’s own frustrations from juggling the responsibilities of a working mother.

Thus far, the space has resonated well with parents, which account for 70 per cent of Trehaus’ members. During Channel NewsAsia’s last visit, the co-working area within the 3,800-square-feet space was more than half-filled while two childminders tended to three children at the play area.

“Certainly, we are not hipsters and neither do we have the cool vibes of Block 71 (the start-up space at Ayer Rajah Crescent), so we can’t and aren’t appealing to people looking for that. Our target group remains parents,” Ms Teo said. “We are also smaller but compared to other bigger spaces, we have a warm, homely feeling of a ‘modern village’.”

Industry experts say this growing trend of co-working spaces being centered on exclusivity and catering to niche groups comes on the back of an uptick in competition.

“These new operators can be considered as ‘start-ups’ themselves and unlike global co-working and serviced office brands such as WeWork and JustOffice, these new co-working spaces would have to carve out a niche and differentiate themselves in order to capture a certain market share from the major players,” said Cushman & Wakefield’s research director Christine Li.

Nonetheless, there are other players who believe in diversity. JustGroup’s founder and chief executive Kong Wan Sing, which owns two sprawling co-working spaces along Robinson Road and Raffles Quay, believes that meaningful collaboration hinges on numbers.

“I feel that collaboration will only be achieved when you have a big pool of members,” said Mr Kong, who added that members at JustCo hail from a wide range of industries such as public relations, fashion and hospitality. Apart from start-ups, bigger corporates including teams from Japanese messaging app LINE and American file-sharing site Dropbox also work out of JustCo’s shared offices.

“In fact, we are planning to become even bigger next year, with two new spaces spanning 100,000 square feet ready over the next six months,” added Mr Kong.

READY FOR FURTHER EXPANSION

And that optimism and willingness for further expansion, be it locally or overseas, is a common tune echoed by co-working space operators that Channel NewsAsia spoke to.

One reason is the lingering glut of office space in the CBD area, which has given co-working spaces more options to choose from and better negotiating power for leases with landlords, players said.

For Collision 8 which has plans for a café and additional space in the works, the co-working space still “has a long way to go before being saturated” despite rapid growth over the past years, Ms Yong said.

Ms Grace Sai, who spearheaded one of the city-state’s pioneer co-working spaces The Hub Singapore, agreed, noting that “cannibalisation within the industry” has not occurred just yet.

“It’s still early days to say (saturation). I think we will continue to take customers away from traditional office space, rather than from each other, so the cannibalisation within the industry isn’t happening yet,” said Ms Sai, who opened her second co-working facility at Cuppage Terrace earlier this month.

However, that is not to say that players, particularly the newer and smaller ones, will continue to enjoy an easy journey. “New entrants will either have to be more cost-competitive or more relevant to the target market they want to serve. Smaller players also will find it challenging because they may not enjoy the economies of scale in the market so there are a couple of us who are predicting a consolidation in the industry within the 18 to 24 months.”

Similarly for softening rents which have played well to the cards of co-working spaces, the gradual absorption of office supply may see rents recovering in the longer run, Cushman & Wakefield’s Ms Li said.

As such, some players like The Hub Singapore are rolling out future plans to offer more than just physical space.

“We have just closed our own venture fund to invest in great ideas and entrepreneurs out of our community. We have also signed memorandum of understanding (MOU) with 10 of the venture funds in the region like Golden Gate Ventures, so that they can have access to the deal flow from our community,” Ms Sai said.

WHO WINS?

As the segment continues to evolve, industry watchers say users of co-working spaces will be on the winning end as they benefit from the wider range of concepts and product offerings over time, said industry watchers.

For Ms Bibiana Neo who is working out of Trehaus at the moment, the family-friendly co-working space is a dream come true. “I wasn’t able to get any infant care or childcare services previously as the ones that I was looking for were all fully taken. If this didn’t come along, I would probably have to travel to an infant care that’s a distance away,” said Ms Neo, who is a business solutions account executive at local firm Xintesys.

“Now, as and when I finish work, I can walk over to the Atelier to feed (my daughter) or spend time with her. I think I’m really blessed that my employers allowed me to work out of the office.”

Businesses also have the option to pick and choose co-working spaces according to their needs.

For travel and social networking app Roammate, the availability of mentors under The Hub Singapore’s “coaching and mentoring” program was a key attraction.

“When we moved over to Singapore, we left behind all our networking connections so we opted for one of the memberships that gave us access to very frequent and accessible time with mentors across a lot of different types of industries, and it has proven to be a good place for us to start and build up our community again,” co-founder Hannah Ryan told Channel NewsAsia.

And it’s not just tech-related start-ups that have tapped into the benefits of co-working spaces. Public relations firm The Umami Collective, for instance, chose to work out of JustCo so as to have a business community at its door step.

Co-founder Suzy Goulding said: “When you are a small business, it’s good to have other entrepreneurial businesses around you to share ideas and collaborate on projects, and there’s always so many things to learn from so it’s always good to have a business community at your doorstep.”

Source : Channel NewsAsia – 24 Aug 2016

Afro Asia Building owner said to be partnering Shimizu for redevelopment

AFRO Asia Building – one of the oldest office blocks along Robinson Road – may finally be redeveloped.

The seven-storey building, said to have been completed in the 1960s and which now houses MPH Bookstores and Uncle Sam’s Claypots among its ground-floor tenants, is owned by Afro-Asia Shipping Company (AAS), which is owned by the Tan family.

AAS recently roped in Shimizu Corporation as a joint-venture partner for the development, The Business Times understands. Word on the street is that the two parties have inked a memorandum of understanding (MOU); but even as they finalise the terms of the proposed joint venture, they are losing no time in re-starting redevelopment plans for the building – plans which had been stalled for several years because of a family feud.

Shimizu and AAS are expected to propose an office scheme, possibly with some ground-floor retail amenities. The proposed joint venture is said to value the existing property in the region of S$170 million; a development charge is said to have been paid some time ago to the state in exchange for the rights to take its gross floor area (GFA) up to the Master Plan plot ratio of 11.2. This would effectively pave the way for a maximum GFA of almost 180,000 sq ft, double the building’s existing GFA.

Under Master Plan 2014 of the Urban Redevelopment Authority (URA), the site is zoned for commercial use and can be built up to 35 storeys.

Shimizu is expected to take a minority stake, probably around 40 per cent, in the joint-venture with AAS. The Japanese contractor will handle the construction and pay the bulk of a lease-upgrading premium to the state.

The site of Afro Asia Building, at 63 Robinson Road, has 34 years left on its lease.

Shimizu and AAS are in the process of submitting a planning application to URA. The duo will then use the planning approval to apply to the Singapore Land Authority (SLA) to top up the site’s lease, analysts predict.

Attempts to reach AAS were not successful.

In 2008, AAS had obtained URA’s written permission to redevelop the site into a 27-storey commercial building. However, despite several extensions of that approval, AAS did not begin redevelopment work; the approval lapsed in August 2014.

The company is also understood to have previously sought SLA’s approval for a lease extension for the over 16,000 sq ft site. SLA agreed in principle and made an offer of a lease extension to AAS, but that offer also lapsed when the company did not proceed further.

Industry observers reckon that AAS did not go ahead with plans to redevelop the property back then because of the dispute between two camps in the Tan family over the will of the company’s late founder, Tan Kiam Toen; the legal dispute among his children was settled last year.

An orphan, Mr Tan left China in 1935 and worked his way up in this region, trading in commodities and venturing successfully. In 1961, he set up AAS, which, four years later, bought what was then the headquarters for Chinese newspaper Nanyang Siang Pau, and renamed it Afro Asia Building.

Cushman & Wakefield is understood to have introduced Shimizu as a potential partner for AAS.

Shimizu was the main contractor for the construction of several CBD buildings; these include the Tokio Marine Centre, Republic Plaza and Mapletree Anson.

Property industry players say a redevelopment of Afro Asia Building would enliven what was once a landmark site in the old CBD. Knight Frank Singapore executive chairman Tan Tiong Cheng said: “The building seems to have been left behind while the surrounding properties have undergone rejuvenation. Even the CPF Building further down the road is slated to be pulled down early next year for redevelopment.”

He added that a redevelopment of Afro Asia Building would be well timed with the 2021 opening of the Shenton Way MRT station about 120 metres away.

The building is on a site with a 99-year lease that started on Jan 1, 1952; its lease expires at the end of 2050.

Market watchers believe that going by the recent history of lease top-ups in the vicinity, SLA may agree to extend Afro Asia Building’s land lease so that it will end in February 2093 – to match the remaining lease terms for 71 Robinson Road and the next-door 77 Robinson Road along the same street. (Afro Asia Building is separated from 71 Robinson Road by McCallum Street.)

Colliers Singapore’s managing director Tang Wei Leng said: “The idea would be to have all sites on that stretch revert to the state simultaneously to facilitate future town planning and a more comprehensive redevelopment of the area.”

Half of released office units at Woods Square sold

RIDING on a government-led initiative to transform Woodlands into a commercial hub, Far East Organization has sold half of the released 124 strata office units in Woods Square, an integrated development it is jointly developing with Sekisui House and Far East Orchard. Prices ranged from S$1,700 to S$2,230 per square foot (psf).

For the first time, it will also be consolidating its satellite operations under one roof, taking up some 70,000 sq ft or three-and-a-half floors in the office tower that it is retaining for lease.

It shows our confidence in this product and this location, Far East chief operating officer for property sales Shaw Lay See told BT. Operationally, it will also enhance business efficiencies and collaboration across business units, she said.

Located near Woodlands MRT with connectivity to Woodlands Civic Centre and Causeway Point, the 99-year leasehold project features two office towers and two Small Office Loft Office (SOLO) blocks with retail, F&B and a childcare centre.

As the first strata office development in Woodlands since the government unveiled its masterplan in 2014 for Woodlands Regional Centre, the project is closely watched by the industry for how a front-mover in the untested region will fare.

A total of 365 office units of 549-5,339 sq ft in Tower 1 and 101 SOLO units (495-1,808 sq ft) in two blocks are up for sale. Far East is keeping Tower 2 for rental by floors. There are eight units of 22,600-22,800 sq ft in Tower 2, including the floors to be taken up by Far East and one floor of 21,500 sq ft to be donated to three non-profit organisations.

Ms Shaw said the take-up at Woods Square since the start of sales on July 29 has been encouraging, vis-a-vis some 35 strata office transactions by developers from January to July.

Data from Knight Frank shows that there were 30 new sale transactions in strata office worth S$60.87 million in the first half this year at an average S$2,620 psf, mostly in Centrium Square, the former Serangoon Plaza.

For Woods Square, the average prices achieved so far were S$1,800 psf for office units and S$1,950 psf for SOLO units. We are in no hurry to clear all units, Ms Shaw said.

Unfazed by what some market watchers described as a glut of unsold strata office in the market, Ms Shaw noted that location is a key consideration for buyers amid a lack of alternative strata offices in Woodlands.

A second commercial site in Woodlands Square is available for application under the Reserve List of the government land sales (GLS) programme, with at least 60 per cent of the total gross floor area (GFA) to be dedicated to office use. But its tender conditions do not allow for more than three strata lots, except for residential GFA, which inhibits the developer that secures the site from slicing out individual office units for sale.

Noting that government plans for a new business cluster Woodlands North Coast have been announced only in broad strokes, Ms Shaw said: When the authorities come forward to make more specific announcements on exactly what’s going to happen, the interest will grow.

Far East is keeping the retail component of Woods Square for leasing. It will then decide on the trade mix two years before the project obtains temporary occupation permit in 2021. As for the 5,400 sq ft childcare centre, the group is in talks with a few potential vendors.

There are also meeting spaces, an auditorium and theatrette, as well as lifestyle facilities such as the gym and swimming pool in the development.

ERA Realty key executive officer Eugene Lim, who is marketing the project, felt that while there is still a lot of hype surrounding the Jurong rejuvenation story, it is about time that investors start to look at Woodlands as the commercial cluster shapes up by 2030. Later on, when everything falls into place, we may see a capital appreciation over time, he said.

The other two appointed agencies for Woods Square are PropNex and Scotia Real Estate. Mr Lim said that marketing agents have been sussing out interest door-to-door from business owners in the industrial estates in the north. Buyers are predominantly small-and-medium enterprises already operating in Woodlands or have business dealings in Malaysia.

Some 65 per cent of the buyers are corporates – mainly business owners and professionals offering services from construction, manufacturing, trading, legal and the creative industries – while the rest are individuals. A majority of corporate buyers are Singapore-incorporated, with Malaysian companies featuring strongly among foreign corporate buyers, Ms Shaw said.

Creative industries are among the key targets for Woods Square, in view of the upcoming North Coast Innovation Corridor that will stretch from Woodlands Regional Centre to Punggol. While the typical office units are more popular with a wider range of businesses, Ms Shaw noted that startups are warming up to the SOLO concept, which has a floor-to-floor height of five metres.

AXA Tower office space up for sale from S$2,550 psf

TWO strata office floors located at AXA Tower at 8 Shenton Way is up for sale from S$2,550 per square foot.

The office space belongs to Perennial Real Estate Holdings, while JLL is the marketing agent for the expression of interest exercise.

With a total strata area of about 25,500 square feet, the offering spans two office floors at the development and comprises eight strata office units on the 21st floor and six strata office units located on the 35th floor. The office units have unobstructed sea views and comes in a regular and column-free layout.

Buyers have the option to purchase the strata units on an individual basis – with each strata unit ranging from 1,744 square feet to 1,959 square feet – or the two office floors collectively.

Major tenants in the development include AXA Insurance, BOC Aviation, Lazada and Tan Kok Quan Partnership.

The property is slated for extensive asset enhancement works, including a new double-volume grand entrance lobby and drop-off point along Shenton Way, an expansion of the existing retail podium to offer more food and beverage and retail options, a brand new two-storey annex block housing medical suites, and enhancements to the lift and security features with the installation of security gantry systems.

Upgrading works will be carried out in phases and expected to start in the third quarter this year.

Clemence Lee, senior manager for capital markets at JLL said: “Prices for the newer strata office developments in the CBD typically range from S$2,800 to S$3,600 per sq ft on strata area. With the office units at 8 Shenton Way priced at an attractive price point of S$2,550 per sq ft onwards, we expect strong interest from end-users who are looking to own their own quality space in the CBD at an affordable price.”

He added that the rejuvenation of the Tanjong Pagar sub-market and the gradual development of the Greater Southern Waterfront will allow investors to reap strong capital appreciation of the property in the mid to long term.

As the property sits on land zoned for commercial use, foreigners are eligible to purchase the property. There is also no Additional Buyer’s Stamp Duty or Seller’s Stamp Duty imposed on the purchase of the property.

The sale will be conducted through an expression of interest exercise which closes on Oct 5 at 3pm.

Perennial Real Estate Holdings at its recent results briefing said that it was intensifying strata sale efforts at AXA Tower, while balancing the leasing commitments there. In the first half of the year, about 64,050 sq ft of office space was leased by new and existing tenants at AXA Tower.