Friday, May 04, 2012

More office space for lease this year

SINGAPORE: DTZ Research said it expects more office space to be returned to the market for lease for the rest of 2012.

In a report, DTZ said about 215,000 square feet of shadow space was made available in the first quarter of the year, up 15 per cent on-quarter.

Shadow space refers to the excess space that companies have leased but are looking to sublet.

DTZ said another 700,000 sq ft could be returned to the market in the coming quarters, either as shadow space or following lease expiry as companies relocate to newer office buildings.

Despite the limited supply of new office space this year, DTZ said there would be some downward pressure on rents as companies remain cautious, avoiding pre-committing to additional space.

DTZ added that landlords of buildings with high occupancy are still keeping gross face rents unchanged.

It said the average gross face rent for prime office space, which does not take into account rent holiday, stood at S$12.00 per sq ft per month in Marina Bay and S$9.80 in Raffles Place in Q1 2012.

But DTZ noted that landlords are more keen to offer leasing incentives such as longer rent holiday ranging between two and six months to fill up the premises.

A two-month rent holiday could translate into savings of 5.6 per cent on effective rent according to DTZ.

The findings also showed that more financial and insurance companies are moving in to Marina Bay.

DTZ said as of Q1 2012, three-quarters of occupied office space in Marina Bay was taken up by companies in the FI sector, compared to 55 per cent in Raffles Place.

The amount of space occupied by FI companies in Marina Bay is expected to grow as occupiers move in to newly completed buildings such as Asia Square Tower 1 and Marina Bay Financial Centre Tower 3.

DTZ head of Asia Pacific Research Chua Chor Hoon said: "The desire by FI companies to be in prestigious locations and in newer buildings designed to suit their needs has led to their gravitation to Marina Bay.

"As more buildings are completed in Marina Bay, the space occupied by FI companies there could soon close in on that in Raffles Place in the next five years."

Despite the relocation of FI companies to Marina Bay, DTZ said the occupancy rate in Raffles Place has held up better in Q1 2012 because of its bigger base of tenants.

The study covers buildings with more than 100,000 sq ft of net lettable area.

- CNA/wk

View the original article here

Source From Channel News Asia

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