CBD office tenants shifting to city-fringe locations: Colliers

SINGAPORE (EDGEPROP) - CBD office-occupiers in Singapore are shifting to affordable Grade-A office spaces in city-fringe locations as companies chase greater affordability and value. According to the “City Fringe Gems” research paper by Colliers International, the average Grade-A office rent in city-fringe locations was $7.90 psf per month (pm) in 3Q2019, which is lower than the average $10.08 psf pm in the CBD over the same period.
City fringe Grade-A office rents have also climbed 18.4% between 2Q2017 and 3Q2019, driven by “benign demand-supply dynamics”, says the report. The rental gap between city-fringe locations and the CBD has widened from 8% in 2011 to 22% today.
Tricia Song, head of research for Singapore at Colliers International, says: “Business locations in the city fringe have strengthened their value proposition considerably in the past years with new builds as well as ongoing urban regeneration efforts undertaken by the government and developers. These locations offer quality business space with reasonable rents, good infrastructure, and are closer to sizable residential enclaves, which provide a ready talent pool for occupiers.”
Colliers has identified Alexandra, Harbourfront, and Paya Lebar as key precincts that have reshaped Singapore’s city-fringe office market, and offer optimal quality and price mix for occupiers.
In Alexandria, rejuvenation of the 13.5ha business precinct includes the integrated business hub Mapletree Business City that was completed in 2016. Together with PSA Building, Alexandra Technopark, and Alexandra Point, the precinct offers over 5 million sq ft of business space.
At Harbourfront, refurbished buildings include HarbourFront Centre (formerly World Trade Centre) and HarbourFront Tower Two (formerly Singapore Cable Car Tower). Other redevelopments include HarbourFront Tower One, Keppel Bay Tower, and the Built-to-Suit Bank of America Merrill Lynch HarbourFront. The entire precinct offers more than 1.6 million sq ft of nett lettable office space.
Paya Lebar is a...