Analysts baffled by Singapore's business park space dearth

There won't be new business parks after 2016.

Singapore is facing an undersupply of business park space, leaving analysts baffled at dearth of business park-zoned land in recent Government Land Sales (GLS) programmes.

"There is clear appetite for business park space given the consistently high pre-commitment levels of business park projects. The approach by the government to the sale of developable business park-zoned land has been somewhat underwhelming," said Michael Tay, Executive Director, Office Services, CBRE.

CBRE noted that islandwide vacancy rates for business parks declined from 10.4% to 9.1% as the market entered the second half of 2015.

Pharmaceutical and tech firms continued to drive demand, with approximately 306,000 sf of business park space taken up during the second quarter. Meanwhile, pre-commitment in pipeline projects gained momentum in Q2 as Mapletree Business City II (MBC II) secured its first tenants.

CBRE Research’s analysis noted that there is currently 2.93 mil sf of future business park space due to be completed from Q3 2015 to end 2016 with almost 60 per cent of this supply locked in ahead of completion, but there will be no new business park space available post-2016.

“Occupiers with requirements for quality business park space have very limited options at present. The market would benefit from an allocation of quality business park space to private developers for the development of more multi-user projects,” Tay said.