The Executive Centre unveils new flagship space at One Raffles Quay
By Timothy Tay
/ EdgeProp Singapore |
Lim expects office demand will continue to grow over the coming months and will mostly stem from US and Chinese tech firms seeking prime office space. (Picture: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - Flexible workspace provider The Executive Centre (TEC) welcomed clients to its new co-working space at One Raffles Quay North Tower on Aug 2 this year. The 38,736 sq ft, co-working centre was originally slated for completion by July this year, but the return to Phase Two (Heightened Alert) caused construction and renovation delays that pushed the completion back by about a month. (See also: The Executive Centre opens new extension at One Raffles Quay)
The co-working centre occupies the penthouse level on the 50th floor and an office space on the 49th floor. The 50th floor can accommodate up to 300 people, while the 49th floor has space for about 100 people.
TEC had operated a flexible workspace centre on the 25th floor in One Raffles Quay for the past 14 years, but it shut that down to focus on its new centre.
The new centre opened its doors with 97% of the office space already leased. (Picture: Samuel Isaac Chua/The Edge Singapore)
The new centre is opening its doors with 97% of the space already leased. Most of the space has been taken up by an international Chinese tech company, which occupies the entire 50th floor and some of the office space on the 49th floor. The rest of the space on the 49th floor is leased to several banking and finance companies.
UBS Group had occupied the two office floors for the past 13 years. When the investment firm indicated its plans to vacate the space, TEC was already in talks with the landlord to secure the prime office space. It succeeded in getting the lease in the middle of 2020.
According to TEC, it was down to good timing rather than any planned moves that saw the Chinese tech company take up most of the available space. The tech company signed up with TEC in 4Q2020.
Enterprise office demand
The Chinese tech company worked closely with TEC to design their office space to suit their needs and corporate culture. According to Yvonne Lim, managing director of Southeast Asia at The Executive Centre, the planning process included initial specifications to a test fit, and involved details such as the colour and choice of materials.
Some of the specific requests by the client included the provision of more meeting rooms and open work areas over office suites, a townhall area, and their own kitchen and food preparation area. The company also wanted a canteen on the 50th floor for 150 people. This space also enjoys a view of the CBD skyline.
“Most enterprise solution clients we have typically request for their own food prep area and dining area, as part of their requirement for a more exclusive space and customisation needs that are based on their corporate guidance,” says Lim. For example, this tech company was also very particular on the air quality, she says.
This client is still in the process of settling in. Lim says that it will be a gradual process because most of its staff still work from home. This is a situation that is common among most of the incoming clients, she says.
Complimentary refreshments and attentive service are among the perks for TEC clients.
“Based on our initial plan for this space, users should start working here by Aug 2, but due to the restrictions, most of our clients started moving in from mid-August,” says Lim.
The timeline for the refurbishment of the two office floors was also delayed due to construction work restrictions during Phase Two (Heightened Alert) this year. Thus, while most of the office space was ready for clients to move in during the first week of August, areas such as the mothers’ room and auditorium were still in the process of being completed.
Prime office rent
The two office floors at One Raffles Quay North Tower that TEC has taken up are among the most premium Grade-A office space available in Singapore’s CBD. According to Lim, the operator is charging rents of about 50% more than the average market rent for a Grade-A office space in the Raffles Place area.
“Based on our feedback, many members share that they are willing to fork out the extras for a premium location and the high-quality design, and our service standard,” says Lim.
Besides large-sized clients, TEC also hosts smaller-sized banking and finance firms. Some of these companies have about 10 people working in the office. At least one company that recently moved into the new space switched from an CBD office space under a conventional lease, to a five-year lease with TEC.
The lounge area on the 49th floor of TEC”s new co-working space at One Raffles Quay.
“These companies have very few alternative office space options if they intend to remain in a similar Grade-A office space because they would only need about 2,000 to 3,000 sq ft. For most landlords, they would be considered a relatively small tenant,” says Lim.
She says that as the pandemic situation in Singapore stabilises amid the vaccine roll-out programme and relatively positive economic outlook in Singapore, most clients are back to signing 12-month leases with TEC.
“Flexibility in terms of lease length depends on the individual client, but most companies that sign an enterprise solution with TEC usually prefer a two- to three-year lease, compared to most conventional office leases that start from five years,” says Lim. She adds that smaller-sized clients tend to sign leases averaging 12 months.
But she says that as companies get used to operating under Covid restrictions and the vaccine roll-out in Singapore, more clients feel confident to go ahead with 12-month leases.
Recovering sector
This was not the case during the “circuit breaker” period last year, when some clients were more cautious and negotiated shorter lease terms of about three to six months amid the uncertain environment.
“Last year, during the circuit breaker period, we went through a bit of a struggle as demand for office space dropped drastically, and mandated remote working was strictly imposed. After the circuit breaker ended, the enquiry rate recovered. But we noticed that in terms of sales conversions, the lease terms were relatively short. This was also the case for renewals among existing clients,” says Lim.
She says that the return to Phase Two (Heightened Alert) in May this year also saw a knee-jerk reaction as office demand fell over the first two weeks of the tighter restrictions, but demand rebounded from the third week.
Most clients started moving into the new space in mid-August, and most are expected to complete the process by the end of the month.
“So far, our sales conversions have been quite steady and consistent. In fact, our closing sales last month was higher than in June 2021. In terms of occupancy across all of centres in Singapore, we saw the start of the recovery in 3Q2020 but it did not rebound to 2019 levels,” she says.
Over the past year, occupancy across all TEC centres in Singapore has stabilised, and the company says that it sees an average occupancy rate of 90% in the past few months. Some centres such as One Raffles Quay have recorded above 90% occupancy, while other locations away from the CBD have seen lower rates of about 80%-85%.
Lim expects office demand in the CBD to continue to increase in the coming quarters and that demand will primarily be driven by tech firms looking to expand their footprint in Singapore or set up offices here.
She adds that office redevelopment projects in the CBD will also cause those tenants to relocate and add to the pool of tenants looking for new office space this year.
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