Chart of the Day: Is Singapore's prime office space market in its twilight years?

There’s about 330,000 sqm of supply coming in end-2016.

Singapore is still a hit when it comes to prime office spaces, according to a report by Cushman & Wakefield (C&W).

Compared to Central Business District (CBD) vacancy of Hong Kong and Shanghai, the Lion City will be offering a far greater range of space opportunities by the end of this year. For instance, a total of 330,000 sqm of new grade-A CBD supply is slated for completion in 2016, including Marina One, Guoco Tower, Duo Tower, and SBF Center.

Further, the availability of expansive floorplates, particularly in the Marina Bay Area, is appealing as they allow for greater efficiency and flexibility in the workplace.

In particular, the Marina Bay Area—with its prime waterfront location, high specification, column-free structure, and emergency back-up facilities—in particular presents an alluring space as it was purposefully built to support Singapore’s target of being a global financial and business hub. This is reflected in the immense proportion of financial sector occupiers (64%) in Marina Bay, including DBS, Citigroup, and Standard Chartered.

However, there have been notable changes over recent years. In reflection of the weaker economic environment in the wake of the Global Financial Crisis, financial institutions have sought to limit operational costs by consolidating space and decoupling front-office and back-office operations.

At the same time, IT and TMT firms, focussing on SMAC (Social, Mobile, Analytics and Cloud), have jumped in to fill the gap in the prime office market. Google and Microsoft were early movers to the precinct, joined more recently by LinkedIn and Vodafone.

“However, it is noted that Google will be moving to Mapletree Business City II, a campus-style accommodation outside of the CBD area. Notwithstanding, while Financial Institutions are still expected to dominate, the tenant base in Marina Bay has diversified to other sectors – in itself a reflection of the diversity in the Singaporean economy,” the report notes.