Tenants, where art thou?

Occupancy rate in the Raffles Place/New Downtown micro-market plunged below 90% for the first time since 2005.

Colliers International reported:

For the first time since 3Q 2005, occupancy rate in the Raffles Place/New Downtown micro-market fell below 90 per cent in 4Q 2011 – easing to 88 per cent from 90.9 per cent in 3Q 2011. The drop in the occupancy rate was due to the completion of some 350,000 sq ft of space in the area in the quarter.

The increase in office stock was not met with corresponding new occupier demand, as many firms – including major financial institutions and accounting firms – have turned cautious towards expansion plans – on the back of the weak global investment climate and growing financial volatility caused by the worsening Eurozone debt crisis, as well as a slowing Chinese economy.

Together, they have dampened sentiment-sensitive activities within the business and financial services sectors in Singapore in 4Q 2011.

Mr Calvin Yeo，Executive Director of Office Services, Colliers International, says, “The demand and supply equilibrium is further tipped with more office tenants relocating or locating some of their operations – including regional functions, back offices and business continuity premises – out of the Central Business District.

"These moves are facilitated by the availability of compelling sub-urban options in the form of new office and business park developments, which have specifications and amenities similar to Grade A office buildings in the CBD.

"For example, Samsung Asia has reportedly taken up about 80,000 sq ft of business park space at Mapletree Business City and is vacating from their 50,000 sq ft office premises at Samsung Hub in the Raffles Place/New Downtown micro-market.”