Down and out in the CBD

It is a long way down from the top of the office buildings that ring Raffles Place, and so it has been for the rents their landlords command. At the height of the property squeeze in September 2008 one tenant with impeccable timing, signed up to pay $23 psf for some space in Republic Plaza.

Had he waited a year, he could have gotten the same space in the same building for $9.50 psf.

The 58 % fall in rental prices for grade A offices illustrated a massive fall, and there may be more to go, according to analysts.

“The market has become so competitive now that many landlords are not even quoting asking rates and just encourage potential tenants to view the apartments first.

This means it is becoming difficult for a tenant to know what the real bottom line rate could be,” said Douglas Dunkerely, managing director of Corporate Locations.

Rental bargains in the Central Business District
So if Republic Plaza still remains one of the most expensive buildings in Singapore and is reasonably full, how are other buildings faring and where can wouldbe renters get the best bargains? “New developments will offer the best value for money because the developer is starting with a completely empty building.
Average rates for most new schemes are in the region of $5.85 to $6.50 psf except the Straits Trading Building and MBFC, according to Dunkerley. Orchard Road office space ranges from $6 to $8 psf whilst a nice address in Beach Road should cost around $5 psf.

But if it’s a real bargain one is looking for then the newer developments in out of town areas like Tampines and the business parks offer the best value at $3.50 psf.
Singapore Business Review has even heard of two media companies who recently rented space at Henderson for $1.60 psf. And there may be further good news for tenants who can hack it out in the boondocks and “ulu” areas, with 4.9 million square feet of business and science park space coming onstream by 2010.
That is the equivalent of 100 football fields, or enough space to house 50,000 new office workers. Any recovery in office rentals may therefore be a long way off.