CapitaLand buys 50% of co-working operator The Work Project for $27m

The operator will also occupy levels in Capital Tower and Asia Square Tower 2.

CapitaLand bought a 50% stake in co-working operator, The Work Project, for $27m as part of its “office of the future” strategy that involves merging a building’s conventional office space (core) with flexible space (flex).

According to an announcement, Capital Tower and Asia Square Tower 2 will be the first two office buildings in Singapore to embrace CapitaLand’s core-flex offerings. The flexible spaces in the two properties, combined with The Work Project’s offerings, have a total area of 177,000 sqft.

CapitaLand Commercial Trust (CCT) has also secured The Work Project as a tenant for Asia Square Tower 2 (level 10 and 11, five years) and Capital Tower (level 20, five years). This makes committed occupancies higher at Asia Square Tower to 97% from 92%.

Total aggregate rent payable under the leases at Asia Square Tower 2 and Capital Tower is around $43.4m which works out to be around $10 psf a month, close to current market rents.

“As The Work Project expands its footprint across Asia-Pacific, which is not limited to CapitaLand’s existing properties, more flexible spaces will be added to meet the needs of tenants’ mobile workforce,” CapitaLand added.

On top of co-working spaces in Capital Tower and Asia Square Tower 2, Capital Tower will feature an exclusive members-only club, collaboration spaces for project teams and the first movie theatre in the CBD. The showsuite for the upcoming CapitaSpring will also be located in Capital Tower.

Fit-out works for the new offerings at Capital Tower and Asia Square Tower 2 are scheduled for completion in the first quarter of 2019. An app and a tenant portal, which enable tenants to book flexible spaces and participate in business and social networking programmes, is also expected to be ready by then.

DBS Equity Research analyst Mervin Song commented, “The announcement that committed occupancy at Asia Square Tower 2 has reached c.97% is above expectations as we had previously assumed 95% occupancy in FY2019, with signing rents within our expectations. Conversely, the potential signing rents of c.$9 psf at Capital Tower is a touch lower than the c.$10 psf/mth we had assumed in FY19.”

“Nevertheless, we believe investors will react positively to Asia Square Tower 2 now close to fully leased, in line with management’s target to improve occupancy from the 88.7% when it first announced its plans to acquire Asia Square Tower 2 in 2017,” he added.