About half a million square feet of office space in the core business district and fringe areas could become available when government bodies move out of Singapore’s city centre by 2015.
Experts said that with occupancy in the CBD bouncing back after the downturn, the space will be sorely needed.
Government agencies such as the Ministry of National Development will be moving out of their premises in the CBD by 2015.
And when that happens, they could be leaving behind as much as half a million square feet of real estate space.
While this could present an opportunity for market players and tenants to pick up a bargain, experts said full redevelopment will be needed, for these properties to reach full commercial potential.
Chris Archibold, regional director, Head of Markets, Jones Lang LaSalle, said: “It’s going to be a land sale and a total redevelopment. That’s probably the most likely scenario. A top up of the land lease so that they’re a 99 year lease, then a sale to the private sector so the buildings can be redeveloped to international standards and specifications.
“I think releasing a number of those buildings in their existing condition, the older ones, is not necessarily a good thing.”
The government bodies that are slated to move include the Ministry of National Development, the Agri-Food and Veterinary Authority, the Building and Construction Authority and the Ministry of the Environment and Water Resources.
Office occupancy rates within the CBD have hit 93 per cent in recent months, their highest levels in a year.
And property-watchers said the additional space left vacant by the government agencies will help to relieve growing pressure on demand for prime office space.
They expect supply to be tight, even with additional space at the Marina Bay Financial Centre.
Donald Han, managing director, Cushman & Wakefield, said: “There will be a scenario of supply overhang that flows into the year but the scenario is that landlords are becoming more confident of the market.
They’re no longer dropping rentals as fast as they did 12 months ago. On top of that, if you look at the economic prospects, a lot of tenants are looking into an expansionary process, looking to increase head count.”
And with little new space in the pipeline after 2013 in both the fringe and non-core CBD areas, experts said the government’s plan to move out within three to five years is timely because it gives developers additional time to figure out what to do with the area once it becomes available.
Source: Channel News Asia, 11 Mar 2010