Business parks and hi-tech rents slowdown in Q4 2011

Rents in Business and Science park as well as hi-tech space peaked in Q3 2011 at $3.85 psf/mo and $2.85 psf/mo, respectively but stayed firm through Q42011.

According to CBRE, the uncertainty in global economic conditions has led to a slow-down of office demand and office rents.

Despite the slow down, CBRE notes that 2011 was a year of healthy growth for rents as Business Parks and hi-tech rents increased by 5.6 per cent and 9.6 per cent respectively.

A total of 11 Business & Science Parks and two hi-tech buildings are expected to be completed between 2012 and 2015.

Together, they represent 5.54 million sf of new supply. Amongst these, Rohde & Schwarz is building a 134,765 sf property with an expected completion date in 2013 while MediaCorp broke ground for its facilities in Mediapolis at one-north during the quarter.

MediaCorp is expected to relocate from its current premises in Caldecott Hill when the development is completed in H2 2015.

More than half, or 66 per cent of the upcoming Business & Science Park space will be in one-north, followed by Changi Business Park (28.4 per cent) and CleanTech Park (5.6 percent).

No business park space in the Alexandra Precinct, Singapore Science Park and International Business Park is expected to be completed from 2012 to 2015.

This year will see the completion of almost 2.0 million sq ft of Business Park space. CBRE’s analysis shows that 22.7 per cent of the upcoming space is owner-occupied and 63 per cent of the space has been pre-committed.

Leasing activities were particularlyactive in Changi Business Park (CBP) where Credit Suisse has pre-committed to 300,000 sq ft in One@Changi City while Cisco Systems leased 110,000 sq ft in UE Bizhub East.

Cisco Systems will move out of its current space in Capital Tower when their lease expires in Q1 2013. Business Parks are increasingly gaining popularity with improvements in amenities and transport linkages while comparatively lower rents continue to be a major attraction for occupiers.

Michael Tay, Director, Office Services, said “The high level of quality in new Business Park buildings has attracted occupiers from office buildings. Their quality and lower rentals have encouraged some companies to move their back-office operations to these Parks.

This phenomenon led to an increase in net absorption from 0.91 million sq ft in 2010 to 1.25 million in 2011, representing an increase of approximately 37 per cent. 

Take-up is expected to slow in 2012 in light of the overriding caution pervading the market. However, there are spurts of growth in industries such as aviation, oil & gas. Also there is healthy pre-commitment for Business Park buildings completing in 2012 which should help to moderate any short term dip in Business park rents.”