June 23, 2007

Office tenants rearrange space to cope with supply crunch

Firms get creative to pack in more staff as downtown rentals keep rising

By Joyce Teo, Property Correspondent

EXECUTIVE recruitment agency Robert Walters Singapore has had to take some drastic measures to cram new staff into its Battery Road offices.

It has torn down walls to squeeze new workstations into every nook and cranny. Even the managing director's (MD's) office had to make way for three more workstations.

Elsewhere, as the office supply crunch gets worse, some tenants are even slotting workers into pantries and conference rooms.

Other firms have downsized workstations or rooms. Some have disposed of bulky furniture such as a sofa set in the MD's room.

In order for Robert Walters to squeeze in 70 employees, up from about 40 a year ago, the firm took decisive action, including the reconfiguring of meeting rooms.

MD Mark Ellwood sacrificed his 118 sq ft office but said it was an easy decision given the urgent need.

'It's more of a personal choice for me,' he said. But space is becoming more expensive and firms just have to be more 'inventive' in the use of space, he said.

There was some relief for Robert Walters when a suitable office unit became available last month. But the company had to pay double the rent to fit in meeting rooms that it had earlier done away with in its main office. Even then, rooms sometimes get filled up fast, which means meetings must be held in the lobby cafe or elsewhere, said marketing manager Rena Tan.

But some companies simply do not have space to convert. So some unlucky office workers suffer the inconvenience of working from split locations - apart from colleagues. Other tenants downgrade to a cheaper location.

'If you want Grade A space, there is nothing really left in Raffles Place,' said Savills Singapore's director of corporate real estate, Mr Simon Hill, adding that some tenants have simply given up looking.

General Electric (GE) Singapore is another company that has reconfigured its space and is considering ways to carve out more space for its growing businesses here.

'We are looking at taking back space on the ground floor of GE Tower, which we sub-let to a tenant many years ago,' said Mr Colin Low, GE's president for Singapore, Philippines & Vietnam. 'Currently, every spare inch in the tower is taken.'

The group may later relocate to premises that can house all its businesses.

Renovation contractor Michael Wu said he has converted conference rooms and pantries into office space, and one room into two or two rooms into three.

Others opted to redo the whole office to fit more people and may replace bulky furniture with new but smaller pieces. 'There's a lot of this reconfiguration work because of limited supply in Raffles Place,' he said.

Some firms prefer to reconfigure space because they want minimal disruption to their business, their lease is still running or it may be too early to commit to a bigger space, he added.

Even property firms which have been tracking the rent rises have been taken by surprise.

Knight Frank managing director Tan Tiong Cheng said his rent at Hong Leong Building will treble when it comes to renewal time in November.

'It's three times more because they recognise we are a long-term tenant. We've been there 20 years. If not, their asking rent is equivalent to 3 1/2 times more,' he said. 'I will have to reconsider our need to be in the Central Business District.'

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