http://www.straitstimes.com/archive/...story-20141025

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Office tenants feel draw of West-side story

Jurong regional centre a growing magnet for the cost-conscious

Published on Oct 25, 2014 12:56 AM

By Rennie Whang


OFFICE tenants seeking affordable rentals are looking west.

Strong occupancy rates at new and upcoming office towers in Jurong East bode well for the development of Jurong regional centre, property consultants say.

Westgate Tower achieved almost 60 per cent pre-commitments ahead of its temporary occupation permit this month, said Mr Alvin Teo, Sun Venture managing director.

A joint venture between Low Kheng Huat and Sun Venture owns the 20-level office tower, which has about 305,000 sq ft of net lettable area (NLA).

Nearby, offices at Jem are about 80 per cent occupied. It has about 314,000 sq ft NLA.

"These early signs of rising demand for office space in the Jurong regional centre is encouraging," said Ms Alice Tan, head of consultancy and research at Knight Frank Singapore.

"The area's growth will be even more exciting when Big Box, Ng Teng Fong General Hospital, Jurong Community Hospital and Genting Singapore's hotel are fully ready in the next one to two years," she added.

Another project, Vision Exchange, will add about 495,880 sq ft NLA of office space. The 740-unit mixed development has launched about 378 units so far, with 72 per cent of them sold.

Median sale prices at Vision Exchange are $2,280 psf for office units and $4,699 psf for retail units. Its wide range of buyers include businessmen, doctors and investors, said a spokesman from developer Sim Lian Group.

Buyer interest in Vision Exchange's strata offices would be driven by plans to transform Jurong Lake District, said Mr Ong Kah Seng, R'ST Research director. Buyers anticipate that all properties - residential, retail and office - in Jurong East will benefit and enjoy long-term capital appreciation, he said.

Leasing interest in offices is likely to come from medical and hospitality-related firms, as well as professional services firms, which tend to be cost conscious on rents, experts said.

For example, CPG Corp will be leasing 83,000 sq ft at Westgate Tower. Other committed tenants include United Overseas Bank, Lockheed Martin, corporate travel firm FCM, and serviced office operator Just Office.

Rents in Jurong East are about half those of prime grade spaces in the central business district (CBD), which are about $11 to $13 psf per month, said Ms Tan.

However, said Mr Ong, demand for decentralised office space is untested, so investors should not overpay for strata offices in suburban locations.

"During economic downturns, we see rents of offices in the CBD plummet... at such periods, there is no incentive for companies to decentralise. Some may even move back to the CBD as rents fall and more choices are available," he said, adding that Japan and Hong Kong have faced such issues in decentralisation.

Retail-wise, Big Box, Genting Singapore's hotel and Vision Exchange are expected to add about 341,324 sq ft of gross shop space by 2017. The area already has Westgate, JCube and Jem.

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