Singapore’s developers are building more office space in the city’s suburbs as companies including Credit Suisse Group AG (CSGN) shift some operations away from downtown to cut costs, according to Cushman & Wakefield Inc.
The city’s supply of suburban office space is expected to rise to 920,000 square feet in 2014, five times the 190,000 square feet that’s expected to be completed this year, the world’s largest privately held property services company said.
“There are a lot of these companies that are now bracing themselves for higher costs, pending a rise in rentals over the next few years,” Donald Han, Cushman & Wakefield’s Singapore- based vice chairman, said in an interview yesterday. “They have to find cheaper options to average down their costs.”
Rents in the central business district are 2.3 times those in the outskirts, according to government data. Leasing costs are rising on the island-state similar to the size of the city of Chicago as companies expand, making Singapore the world’s ninth-most expensive office market, Colliers International said.
About 44 percent of office space will be in the suburbs by 2014, up from 6 percent now, Han said. CapitaLand Ltd. (CAPL), Southeast Asia’s developer, said its biggest investment commitment this year is a S$1.5 billion ($1.2 billion) office and retail building in a western Singapore suburb.
An outskirt project close to subway lines could become a “sub-hub,” Chong Lit Cheong, chief executive officer of CapitaLand’s commercial developments, said in an interview yesterday, prompting the Singapore developer to also “look out of the central business district.”
Credit Suisse said in a March 17 statement it plans to move its Singapore operations from five different sites to a downtown building and a location in a northeastern suburb that will be completed in the fourth quarter of 2012.
Switzerland’s second-biggest bank will take five floors in the new building called One@Changi City, with each level occupying 315,000 square feet, it said in the statement. Rents at the new building cost about S$4 per square feet, almost a third of those at its existing downtown location, Han said. Jane Clapcott, a Singapore-based Credit Suisse spokeswoman, declined to comment on rents, citing its lease agreement.
Deutsche Bank AG (DBK), Germany’s largest bank, will also move part of its operations to Mapletree Business City in the southwestern part of the city by January 2012, where it will take 120,000 square feet of space, said Terence Ng, a Singapore- based spokesman, who also declined to comment on rents.
SAP AG, largest maker of business-management software, took 135,000 square feet in January at Mapletree Business City, which is owned by Mapletree Investments Pte., a unit of Singapore’s Temasek Holdings Pte.
“We also took into account the many conveniences,” Colin Sampson, chief financial officer for SAP Asia, said in an e- mailed reply to queries, citing on-site eateries, medical and child-care services, as well as proximity to a new subway line.
To contact the reporter on this story: Chien Mi Wong in Singapore at email@example.com
To contact the editor responsible for this story: Lars Klemming at firstname.lastname@example.org
Developers here are building more office space in the city’s suburbs as companies including Credit Suisse and Deutsche Bank shift some operations away from downtown to cut costs, according to Cushman and Wakefield.
The city’s supply of suburban office space is expected to rise to 920,000 sq ft in 2014, five times the 190,000 sq ft that is expected to be completed this year, the world’s largest privately held property services company said.
About 44 per cent of office space will be in the suburbs by 2014, up from 6 per cent now, said Cushman and Wakefield’s Singapore-based vice-chairman Donald Han.
CapitaLand, Singapore’s largest listed property developer, said its largest investment commitment this year is a S$1.5 billion office and retail building in the western part of the country.
Rents in the central business district are 2.3 times those in the outskirts, according to Government data. Leasing costs are rising, making Singapore the third most expensive in the Asia-Pacific region in the second quarter, Colliers International said.
“There are a lot of these companies that are now bracing themselves for higher costs, pending a rise in rentals over the next few years,” said Mr Han. “They have to find cheaper options to average down their costs.”
Source : Today – 6 Aug 2011