Singapore’s office decentralisation
WHEN property developer Ho Bee Land bought a commercial site at North Buona Vista Drive for S$410.99 million in 2010, observers said then that the resulting office product would be untested for the area.
The project, sited outside the Central Business District (CBD) in a university and R&D enclave, was targeted at multinationals keen to set up headquarters near their research facilities.
But as Ho Bee tells The Business Times, getting corporates to sign up “was not easy, as one-north is not known as an office location. We struggled initially.”
As the one-north MRT station and retail mall Star Vista were built up, Ho Bee’s move paid off. Since completion in 2013, that building, The Metropolis, has contributed significantly to the company’s annual bottom line, with rental income accounting for 42 per cent of its revenue in FY2018. Today, The Metropolis is fully occupied.
The Metropolis is one of several “decentralised” office spaces in Singapore that have sprung up over the years, as the government continues its efforts to build employment areas outside the CBD – in line with a decades-long policy to put more jobs outside the city centre. Plans are already in the works for three major economic gateways in Singapore’s east, west and north, including a second CBD in Jurong Lake District.
Taking things a step further, the government just this week announced plans to encourage more non-office use into the CBD, which could change the make-up of the country’s traditional business hub and lead more office tenants to move outwards.
Offices outside the CBD see good take-up rates today, though industry players say a cocktail of considerations – ranging from cost to occupier profile – weigh on corporates’ minds.
For well-established non-CBD markets, Grade A office vacancy rates were tight as at Q4 2018: under 1.5 per cent for Tampines, Jurong, one-north and Novena/Newton, according to Cushman & Wakefield data.
Offices there have attracted big names too. In 2015, Daimler signed on to Westgate Tower in Jurong from Centennial Tower, reportedly saving 30 per cent in rental in the process.
Government entities have also moved out of town, with the Agri-Food and Veterinary Authority (AVA) and the Building and Construction Authority (BCA) moving to JEM in Jurong, and the CPF Board moving its corporate functions to Novena from the CPF Building in Robinson Road.
Those moves were likely driven by both push and pull considerations: certain businesses (or parts of the group) do not require a prime CBD location for their local or regional operations, or they would benefit from proximity to the industrial activities in the west region.
“Thus the continued expansion of employment areas outside the CBD will increase the offering of alternative options for business space, catering to a wider range of businesses,” says a URA spokesperson.
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