CICT’s Singapore Office Bldgs To Face Transitory Vacancies
SINGAPORE – UOB Kay Hian expects CapitaLand Integrated Commercial Trust’s (CICT) office portfolio in Singapore will see transitory vacancies, reported The Edge on Thursday afternoon (14 October, SGT).
In particular, CICT’s office properties that would likely see transitory vacancies include CapitaGreen, Capital Tower, and Asia Square Tower 2, said UOB Kay Hian analyst Jonathan Koh.
He thinks it would be more difficult for the trust to secure new occupants, noting that although actual physical occupancy level of office space has increased from 21 percent in July to 37 percent in early-September, it has since fallen due to a spike in daily COVID cases and the return of working from home (WFH) as the default work arrangement.
Aside from that, the cap of two persons per group has negatively impacted office space visits and viewings. Fitting out of workspaces is also taking longer because of the shortage of foreign workers and social distancing measures.
The impact of the aforementioned is already being felt. For instance, Koh believes CapitaGreen will face transitory vacancies as it would take a longer time to complete fit outs of office space as well as secure replacement tenants.
AT Asia Square Tower 2, the occupancy level fell 10.8 percentage points quarter-on-quarter to 84.7 percent during the 2nd quarter of CICT’s FY2021 after Allianz relocated to 79 Robinson Road. Similarly, CapitaTower’s occupancy is forecasted to decline by 22 percentage points to 75 percent as JPMorgan is poised to transfer to CapitaSpring in Q4 FY2021.
Meanwhile, a large chunk of office space at the upcoming CapitaSpring has already been leased. Anchor tenants consist of JPMorgan and Sumitomo Mitsui Banking Corporation. Other occupants include Red Hat, Saxo Markets, Square Point, and The Work Project.
Notably, 635,000 sq ft of office space in CapitaSpring has obtained temporary occupation permit (TOP) in August 2021.
Furthermore, Koh shared that CICT’s management targets to pre-lease 80 percent to 90 percent of CapitaSpring by the end of this year, and signed leases will begin contributing progressively from the first half of FY2022.
