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Thread: Office portion of Marina One about 30% pre-leased

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    Default Office portion of Marina One about 30% pre-leased

    http://www.straitstimes.com/business...-30-pre-leased

    Office portion of Marina One about 30% pre-leased

    Jun 22, 2016

    Rennie Whang


    The office portion of Marina One - one of three major office projects set to come onstream in the next year or so - is about 30 per cent pre-leased.

    The huge project by M+S, a joint venture between Malaysia's Khazanah Nasional and Singapore's Temasek Holdings, is set for completion next year - contrary to earlier market talk that it would be ready in the second half of this year. It had its topping-off ceremony yesterday.

    The development comprises two Grade A office towers of about 1.88 million sq ft in net lettable area; 1,042 apartments and 140,000 sq ft of retail space.

    So far, M+S has sold about 368 apartments and has launched 401 units in one tower for sale. More apartments will be launched for sale when the project is completed.

    The retail portion is about 50 per cent pre-leased; its tenants include Virgin Active, Cold Storage and Cookhouse by Koufu, according to earlier reports.

    Ms Kemmy Tan, M+S chief executive, said it has secured "some of the largest office leasing deals" this year. She added: "We continue to be in active negotiations with many other multinational companies which are looking at securing office spaces over multiple floors."

    One tenant said to have signed a deal for several floors is PwC Singapore, which is taking up more than 200,000 sq ft of space.

    The developer's other large integrated project is DUO in Bugis, which comprises a Grade A office tower of about 570,000 sq ft in net lettable area; 660 apartments; 56,000 sq ft of retail space and a 342-room hotel. It will be completing next year as well.

    An M+S spokesman said it secured at DUO the largest office leasing deal of nearly 100,000 sq ft last year as well as pre-commitments from multinational companies in finance, biomedical, serviced offices and other industries.

    Market leasing activity has gathered momentum, focused on the upcoming developments, said Mr Moray Armstrong, CBRE managing director for Singapore, advisory and transaction services.

    "Occupiers are increasingly cognisant that there is clear value offered by these market opportunities after the recent pullback in rents," he said.

    Office rents are said to be about $7 psf per month for larger tenants at Marina One.

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    Default Low rents draw big names to Marina Bay office spaces

    http://www.businesstimes.com.sg/real...-office-spaces

    Low rents draw big names to Marina Bay office spaces

    Mitsui looking at 80,000 sq ft at Asia Square Tower 2; PwC in advanced talks for 180,000 sq ft at Marina One

    By Kalpana Rashiwala

    [email protected]

    @KalpanaBT

    Jun 22, 2016


    SEVERAL big potential office leasing deals involving relocations are in motion, as occupiers take advantage of currrent low rents amid a wave of new office completions to move into newer buildings in the Marina Bay area which offer greater space efficiency due to larger floor plates.

    However, net office demand is not expected to increase much in the absence of any "category killer" to drive office demand, as JLL's head of markets Chris Archibold puts it.

    Also, corporates require less office space per head when they move from an older building to a newer property. The space-saving is due not only to the bigger floor plates, which cut down on circulation space and duplication of common facilities such as pantries and lobby areas, but also due to the adoption of new trends such as open-plan offices and flexible working spaces.

    "So when companies relocate to a new building taking the same square footage of space, in reality they cater for headcount growth; it's just that there is no growth in the physical space," said Mr Archibold.

    The market is already abuzz with some big-name moves.

    Japanese conglomerate Mitsui is believed to be in advanced discussions to lease about 80,000 sq ft at Asia Square Tower 2; it is expected to move out most of its divisions currently housed in 80 Robinson Road, where it is also said to occupy about 80,000 sq ft. The relocation to Asia Square is slated for the first quarter of next year.

    PwC is also said to be in advanced negotiations to lease about 180,000 sq ft at Marina One East Tower. It is currently the anchor tenant in its namesake building, owned by DBS, at 8 Cross Street; PwC's lease in the building expires in early 2018, based on market talk. PwC declined to comment as did JLL, which is understood to be advising PwC.

    A bunch of smaller office relocations are also under way, according to market chatter.

    Daiwa is poised to exit OUE Downtown 2 (the former DBS Building Tower 2) along Shenton Way and will occupy part of a floor at Marina One's East Tower. Software company SAS has signed up for about 20,000 sq ft at Guoco Tower; it will be leaving Twenty Anson.

    CBRE executive director of office services Michael Tay said the flurry of activity is being fuelled by the current low rents, which provide a window of opportunity for tenants to secure good-quality new office space amid the current wave of completions.

    "Occupiers are also recognising the fact that beyond the current batch of supply, there may be a period of void or under-delivery of good-quality offices in the CBD, thus prompting their action and preparedness to look at relocating now."

    For now, there is more than ample new office completions on the horizon.

    About 3.5 million sq ft net lettable area of offices are slated for completion within the next 12 months in Guoco Tower, Duo, Marina One and the new UIC Building. And after Fraser Tower is completed in the Telok Ayer/Cecil Street locale in 2018 there is a lack of clarity on the Grade A CBD office supply situation, Mr Tay noted.

    Many major tenants whose leases are up for renewal are weighing the pros and cons of relocating to new premises versus renewing leases for existing premises. McKinsey is understood to have renewed its lease at Centennial Tower. AXA is expected to do the same at AXA Tower at 8 Shenton Way, where its occupies 74,000 sq ft spanning five floors; its lease is up for renewal in mid-2017.

    Industry observers note that some occupiers may settle for lease renewal rather than relocation - if they like where they are and receive a good renewal offer from their landlord. For some occupiers, the reason to stay put and do a lease renewal, despite greater efficiency in a newer building, could be that they find it hard to secure budgets for fit-out costs involved with relocations given the general business slowdown.

    Said Mr Archibold: "We see a lot more people going out to the market because rents have come off and there is a fair amount of new good-quality office space out there. However, not all of this activity will translate to new lettings because of cost constraints."

    Giving his take, Mr Tay said: "You might be surprised that at least 50 per cent of occupiers who are currently in the market may relocate." Among other factors, he points out that tenants now have the opportunity to secure space in new, premium CBD office buildings at "a very competitive rent". "If you don't do it in this cycle, there is uncertainty of the timing of delivery and quality of the next wave of supply beyond 2018."

    Even during the ongoing broad-based global economic slowdown, Asian financial institutions seem to be in a better position to incur capex for relocation than their US and European counterparts. A case in point would be The Bank of Tokyo-Mitsubishi UFJ (BTMU), which has previously confirmed that it will not be renewing its lease at Republic Plaza which is due in mid-2017. It occupies 150,000 sq ft across 13 floors. The Business Times reported earlier that BTMU is heading to Marina One. It is now said to be finalising a lease for 140,000 sq ft spanning four floors.

    That said, office relocations, even big deals, are not expected to lead to much net new office demand, acknowledge property consultants.

    "Most companies are not expanding at the moment," noted Mr Archibold, adding: "And moving from an older building to a new property results in about 5 to 15 per cent space saving due to a bigger floor plate. In addition, people are changing their way of working, with more open-plan offices and flexible working spaces, which can result in a further 5-10 per cent saving on space."

    For instance, Mitsui's space at 80 Robinson Road is said to be spread across more than five floors while at Asia Square Tower 2, it is expected to lease two entire levels plus two-thirds of another floor. Market watchers reckon Mitsui is expected to pay about S$7.50-8.50 psf gross effective (that is after factoring rent-free period for fitting-out) monthly rental at Asia Square. Savills, which is understood to be acting for Mitsui, declined to comment.

    PwC is expected to lease five floors of the Ea-st Tower at Marina One. Word on the street is that the current gross effective average monthly rental level at Marina One for big tenants would be around S$7 psf. PwC could be paying S$5-plus psf at its current premises in Cross Street.

    Marina One is being developed by M+S, a company co-owned by Malaysian sovereign wealth fund Khazanah Nasional and Singapore's Temasek Holdings.

    "The number of occupiers out in the market now indicates rents for big-space occupiers in brand-new Grade A office buildings may have reached a support level, said Mr Tay of CBRE.

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    Only 30% pre-leased.

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