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Business Advice

Business park demand stable, rents unchanged

Demand for business and science park spaces in Singapore remained stable in the second quarter, with a marginal drop in vacancy rate to 6.2 per cent, from 6.3 per cent in Q1, consultant CBRE noted in its latest report
The Business Times - July 17, 2013
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Business park demand stable, rents unchanged

DEMAND for business and science park spaces in Singapore remained stable in the second quarter, with a marginal drop in vacancy rate to 6.2 per cent, from 6.3 per cent in Q1, consultant CBRE noted in its latest report.


CBRE attributed the drop in the vacancy rate to the expansion of existing tenants, such as Samsung in Mapletree Business City and biomedical firm Covance in The Synergy.


Pre-commitment levels for the remainder of 2013 stand at 68 per cent, for an estimated net leasable area of 2.15 million square feet.


At least 5.43 million square feet of potential future supply will be available over the next three years as well, out of which about 40 per cent has been either pre-committed or built-to-suit.


This includes two Changi Business Park built-to-suit projects with a 2014 completion date; the 76,000 square feet DBS Hub Phase II; and Rigel Technology's R&D Centre, the leasable area for which has not yet been confirmed.

CBRE's executive director of office services, Michael Tay, said: "Despite the pipeline in the next four years, the pre-commitment level reduces the possibility of an over-supply situation during this period."


The increase in leasable area is also expected to curtail medium- and long-term spikes in business park rents.


Rents are staying unchanged this quarter, at $3.80 per square foot per month for parks outside the central area, such as Science Park and Changi Business Park.


Centrally-located parks like Mapletree Business City, which are now classified as first-tier parks under the new two-tier system, also continue to see stable rents, at $5.30 per square foot per month.


However, with industrial growth and office decentralisation, Mr Tay said he anticipated that rents would grow by around 5 per cent from now until mid-2014.

CBRE observed that, despite tepid demand, landlords were reluctant to slash asking and headline rents, thus keeping factory rents stable.

A similar trend was seen in the investment market, with sellers and developers sticking to their guns in terms of asking prices. As a result, investment value fell, but industrial capital values continued their upward climb.


Capital values for 60-year leasehold and freehold factories and warehouses increased by 2 to 5 per cent, quarter-on-quarter.

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