Cost-conscious tech firms bid goodbye to costly CBD offices

Over 300,000 sq ft of space have been vacated.

Cost-conscious technology firms who cannot stomach Singapore's high prime office rents are choosing to leave the Central Business District (CBD) and move to decentralized locations.

A report by Cushman & Wakefield said that over 300,000 square feet of space have already been vacated by some new tech firms during the past year through the first quarter of 2015.

"These companies cite ample space options and lower rents in fringe locations, providing them flexibility for expansion and freeing up capital for other expenditures," the report said.

Cushman & Wakefield cautioned that although prime office rents have risen rapidly since 2012, cost pressures and slower-than-expected economic growth will dampen near-term demand.

“In view of the less-than-expected economic growth this year, coupled with the record office supply in 2016 alone, landlords seem to have lowered their rental expectations especially in the Marina Bay area in the most recent quarter. In addition, high rents in the core CBD, along with corporates’ undiminished focus on costs, will continue to have an effect on near-term demand. Specifically, these pressures could further induce space rationalization and the already-evident trend of relocating more cost-conscious operations out of higher-cost locations into decentralized and fringe markets and business parks,” the report said.