Tech Behemoths, Openings Of More Co-Working Spaces To Support Office Demand
SINGAPORE – Colliers International expects the city-state’s sluggish office leasing market to be buttressed by the expansions of tech giants and the openings of more flexible workspaces to meet the anticipated higher demand, reported The Business Times today (8 October).
The property consultancy revealed on Wednesday that about 142,000 sq ft of co-working spaces are poised to start operating over the next 3 months.
For example, JustCo shall establish a 60,000 sq ft outlet at The Centrepoint, whereas WeWork is set to open an 82,000 sq ft outlet in 30 Raffles Place.
The Great Room will also manage about 37,000 sq ft of office space at the new Afro-Asia i-Mark building, 70 percent of which has already been pre-committed prior to the property’s targeted completion during the fourth quarter of this year.
Come 2021, The Executive Centre intends to occupy the two highest levels in One Raffles Quay North Tower.
Another bright spot for Singapore’s office rental market that is forecasted to drive demand and improve sentiment are plans by Eastern and Western tech giants to set up a major presence in the city-state.
For instance, Colliers noted that China’s TikTok app developer ByteDance intends to inject billions of dollars and hire hundreds in Singapore, while its compatriot Tencent plans to open a new office here.
American cloud computing firm Rackspace Technology and social media giant Twitter also intend to boost their workforce in Singapore.
“While some of the tech giants have a small presence in Singapore now, we can expect them to bloom in the years to come and improve the tech sector representation of the overall occupiers in Singapore,” said Colliers’ Head of occupier services in Singapore Rick Thomas.
In fact, Cushman & Wakefield (C&W) estimates that tech firms have been responsible for 350,000 sq ft of new office leases and expansions year-to-date. Office demand by such companies is also forecasted to rise to between 400,000 sq ft and 500,000 sq ft come 2021.
However, Colliers revealed that rents of Grade A office space in Singapore’s central business district (CBD) edged down by 3.4 percent since the start of 2020 and office rents could likely fall further by the end of the year.
Specifically, monthly gross effective rents of Grade A office space in the CBD dipped by 2.3 percent on a quarterly basis to S$9.77 psf in Q3, while that for Grade B office premises slid 2.4 percent to S$8.09 psf.
Colliers’s Research Head for Singapore Tricia Song observed that office lessors are still providing higher perks, as demand for commercial properties becomes more lethargic amidst the worldwide economic downturn.
As a result, rent-free periods for Grade A office space in Singapore’s CBD rose from 1.3 months to 1.5 months.