Frasers Tower: Beyond a Grade-A office tower

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/ EdgeProp Singapore
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March 29, 2019 2:51 PM SGT
Developer Frasers Property Singapore’s first CBD office tower is the missing piece linking the area to the Tanjong Pagar district. There are also community spaces to foster interaction and draw customers to the F&B outlets.
During the peak lunch hours of 12pm to 2pm on weekdays, office workers in the CBD now have more dining options. Likewise, when it comes to meeting friends for dinner or drinks in the evenings. There is Muchachos Mexican restaurant, Cuba Libre Café & Bar, local fusion restaurant Relish as well as new to market offerings, Italian restaurant The Mast and Thai eatery, Ocha Fresh Thai. For those who want fine dining, there is Preludio by Colombian chef-owner Fernando Arevalo, formerly at Artemis in CapitaGreen.
These F&B outlets are located in a three-storey retail podium called The Oasis, featuring a cascading design with greenery and water elements as well as a landscaped roof terrace. The Oasis is integrated with the 38-storey Grade-A office tower, Tower. Located on the corner of Cecil Street and Telok Ayer Street, the building was completed in mid-2018.
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The Oasis is the development's retail podium with a roof garden (Pictures: Albert Chua/EdgeProp Singapore)
Fronting the tower is a park with a fountain, designed such that a stage can be put over it for live performances in the future. There are also pavilions with seats and restaurants designed as kiosks within the park to draw people in, says Low Chee Wah, Frasers Property Singapore’s senior executive vice president and head of retail and commercial.
“When we built this tower, it was zoned for an office development,” explains Low. “But we wanted to build a community: We created four community zones so that people can use this place not just as an office but as a gathering point too.”
The development was designed by DP Architects, with Hyundai Engineering & Construction Co as the contractor, having been awarded the $287 million construction contract in 2015. In August 2013, Frasers Property Singapore paid $924 million or $1,112 psf per plot ratio for the 99-year leasehold, 82,841 sq ft, commercial site. It was where the former Telok Ayer Performing Arts Centre once stood.
Frasers Tower comprises a 38-storey Premium Grade A office tower with community zones
According to Low, the developer undertook a “sun study” to find the best orientation of the building that will provide shading. Landscaping was also integrated within the building.
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Community spaces
While the building was under construction, there was a shift in office trends: Large tech companies like Google began incorporating breakout areas, recreational spaces with foosball tables within their office space.
Recognising the need to create such spaces for tenants, Frasers Tower created the four community zones within the building: other than The Oasis, there are The Sky, The Terrace and The Park. All the community areas have natural ventilation and are designed with spaces for tenants to relax, to hang out or collaborate.
The Terrace located on the fourth floor is designed as an event space – it can be used for townhall sessions, recreational activities and special events for up to 200 people. There is also Wifi connection so people could work there if they want, and foosball tables, pool tables, table tennis tables as well as resting pods.
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Typically, the rooftops of commercial builds are where mechanical and engineering (M&E) equipment is placed, says Low. Frasers Property Singapore has converted the tower’s rooftop into a garden called The Sky where tenants can enjoy panoramic views of the city and rent the space for events.
“A lot of buildings in the CBD have spaces like this but they end up becoming smoking areas because they’re not fitted-out for use,” notes Low.
The Terrace has been designed as a space for tenant events, town hall sessions and recreation activities
High specifications
The building also comes with end-of-trip facilities in the basement, from the 117 secured bicycle parking system, to lockers, shower facilities with towels provided and changing rooms. “People will not cycle to work if you don’t provide such facilities,” he notes. The carpark, and a lobby with a pick-up and drop off point are also located in the basement.
Frasers Tower marks Frasers Property Singapore’s first Grade-A office development in the CBD, and is in fact, its first office development in nearly three decades – since Alexandra Point, a 24-storey office tower on Alexandra Road, was completed in 1992. Other commercial projects developed by Frasers Property Singapore in the past include Alexandra Technopark and 51 Cuppage Road.
“This being our first office development in a long time, we put a lot of thought into the process,” he says. “We didn’t want to build a typical office building. We wanted to differentiate the product from what is available in the market. We also recognised that the workplace has changed. People don’t just work at their workstations in the office all day.”
Frasers Tower has a total net lettable area (NLA) of 663,000 sq ft with floor plates of 20,000 to 22,000 sq ft. The building has a BCA Green Mark Platinum rating, which is the highest accolade in sustainability. Besides low-e, double-glazed glass, the developer has also invested in the latest destination control system for the lifts. The project also uses rainwater harvesting used in irrigation of plants and NEWater to serve the cooling towers.
View of Telok Ayer and Chinatown from Frasers Tower
Diverse tenant mix
To date, the office tower has achieved 94% occupancy, with asking rents now in the range of $11 to $13 psf per month. Anchor tenants include tech giant Microsoft Singapore and French oil and gas company Total Oil, which are taking up a combined floor area of 232,200 sq ft or 35% of the total NLA.
Other tenants in the tower are a diverse mix, and include Japanese trading house Sumitomo Corporation; global design, architecture and engineering firm Arup; New Zealand dairy co-operative Fonterra; American insurance company Pacific Life; and serviced office provider The Executive Centre.
“We have observed that a small but growing number of corporates have been exploring enterprise solutions offered by co-working and agile space providers,” says Moray Armstrong, CBRE managing director of Singapore. “It’s still early days and we do not see a significant threat to traditional office demand at this point.”
Recent M&A activity in the media and banking sectors could also weigh on future office demand, notes Armstrong. “The prospects for the Singapore office market may be increasingly reliant on the stellar growth levels in technology and agile space operators being maintained.”
Low: We wanted to build something beyond an office. We wanted to build a community
Benefitting from tight supply in the CBD
Many occupiers are still keen to have a CBD presence, points out Chris Archibold, JLL Singapore head of leasing. “However, the limited availability of good-quality space for lease, based on most Grade-A office developments in the CBD enjoying near-full occupancies, is driving rentals steadily upwards.”
JLL’s preliminary research showed that the average vacancy rate of Grade-A office space in the CBD has tightened from 7.2% in 4Q2018 to just 6% in 1Q2019. By the end of 4Q2019 when more occupiers which have committed to space in recent completions such as Frasers Tower and 18 Robinson move in, JLL forecasts that the average vacancy rate of Grade-A office space in the CBD could plunge below the frictional level of 5%. “The squeeze for space had led to 1Q2019 rent growth accelerating to 3.7% q-o-q from the 3.3% q-o-q in 4Q2018,” says Archibold.
No relief is seen for supply any time soon, says JLL. This is because the next office completion in the CBD will likely be 79 Robinson Road and Afro Asia i-Mark which are expected to provide some 0.7 million sq ft of office NLA in total only from 2020. The refurbished Chevron House could also return to the market in 2020. Thereafter, CapitaSpring and Hub Synergy Point are expected to come on stream in 2021, followed by IOI Properties’ Central Boulevard project and Guoco Midtown.
“Landlords remain fairly optimistic on the outlook and rent expectations,” says Archibold. “This will be supported by the tapering new office supply over the next 12 months. The outlook for the office market is still positive over the immediate to mid-term.”
According to CBRE, Grade-A Core CBD office rents in 1Q2019 grew 3.2% q-o-q to $11.15 psf. This marks the seventh consecutive quarter of rent growth, bringing rents to 24.6% higher than the last trough back in 2017.
Connectivity, Greater Southern Waterfront
In recent years, Tanjong Pagar has been rejuvenated since the completion of the $3.2 billion Tanjong Pagar Centre integrated development in November 2016. It is linked directly to the Tanjong Pagar MRT station in the basement.
Frasers Tower likewise has an underpass that leads directly to Tanjong Pagar MRT station. The developer has also made provision for an overhead link from the second level to the neighbouring Bangkok Bank Building on Cecil Street if the latter is redeveloped.
Frasers Property Singapore’s Low sees the Telok Ayer and Tanjong Pagar area benefitting from the development of the Greater Southern Waterfront. According to the URA Draft Master Plan 2019, the Greater Southern Waterfront will span the southern coastline from Pasir Panjang to Marina East. In the future, after the City Terminals and Pasir Panjang Terminal relocate to Tuas, about 1,000 ha of land will be freed up for development.
Together with other areas like Keppel Club and Sentosa, the Greater Southern Waterfront will double in size to 2,000 ha.
In addition, Frasers Tower could benefit from the rejuvenation of the areas around Anson Road, Cecil Street, Shenton Way, Robinson Road and Tanjong Pagar under the CBD Incentive Scheme announced on March 27.
In addition, Frasers Tower could benefit from the rejuvenation of the areas around Anson Road, Cecil Street, Shenton Way, Robinson Road and Tanjong Pagar under the CBD Incentive Scheme announced on March 27.
The CBD Incentive Scheme offers an increase in gross plot ratio to encourage conversion of existing office developments to hotel and residential uses. “This could be beneficial for many office developments which face challenges when it comes to land use zoning,” says Christine Li, Cushman & Wakefield senior director of research.
There could also be wider implications for the office sector, says Li. Given that there could be a wave of redevelopments into the residential and hotel segments to tap the CBD Incentive Scheme, office supply in the medium term could be tighter, she notes. “This could potentially cause Grade-A CBD office rents to rise further as supply is taken off the market,” she adds. “Nonetheless, there could be positive outcomes as some companies would shift out of the CBD, which is in line with the government’s decentralisation strategy of commercial activities.”
In the meantime, word on the street is that there is already an interested party doing due diligence for the acquisition of Frasers Tower. According to sources, the indicative price is likely to be “just below $3,000 psf”. However, Frasers Property Singapore’s Low declined to comment. It looks like investor interest in Grade-A office towers in the CBD is likely to remain high.