Vacated spaces fill up in hardy office market

Business Times: Thu, Jul 12

[SINGAPORE] The huge space that banking giant Citi left behind when it vacated Centennial Tower for Asia Square late last year has almost been filled. Meanwhile, other major office leasing deals are brewing as this segment has remained resilient despite dire predictions. Nearly 90 per cent of the 129,000 sq ft of space left by Citi has already been leased. Some has been taken up by existing tenants at the building, such as Sumitomo Mitsui Banking Corporation (SMBC) and McKinsey, with each leasing a floor of about 18,000 sq ft. New tenants in the building include alternative dispute resolution company Maxwell Chambers, which has also taken a floor, and PetroChina. Several new-to-market international offshore engineering and energy players have also signed up for space at Centennial Tower. A spokeswoman for Pontiac Land Group - which owns the Millenia Singapore development that includes Centennial Tower - said that 114,000 sq ft of the 129,000 sq ft vacated by Citi at Centennial Tower has been leased and "we expect to close leases for another 10,000-11,000 sq ft in the next couple of weeks". She also confirmed that SMBC has added a floor, boosting its space to around 110,000 sq ft, spanning across slightly more than six levels. The bank has expanded its headcount in Singapore from 454 previously to 640. It is now Centennial Tower's biggest tenant and has installed two signages at the top of the 34-storey building's exterior facing Marina Bay and East Coast Parkway. This is said to be the first time the Japanese bank has exterior building signage outside of Japan. Centennial Tower has total net lettable area (NLA) of 580,000 sq ft. Pontiac's spokeswoman declined to comment about McKinsey, which is said to have doubled its space to two floors in the tower. However, she said that Petro China and Maxwell Chambers have moved into the building. She also confirmed that Citi will be vacating about 143,000 sq ft at Millenia Tower next door when its lease expires in December 2013. "We have confirmed tenants for two floors (of this space) in the building," she added. Current transacted rents in the two buildings are $9-11.50 psf a month. The 41-storey Millenia Tower, with about 700,000 sq ft NLA, was completed in 1995. This was followed by Centennial Tower, in 1997. Both have floor plates, or NLA per floor, of 18,000 sq ft and are undergoing a $25 million spruce-up that will cover toilets, lifts and lobbies. Colliers International is understood to have acted for SMBC for its lease expansion at Centennial Tower. German insurance group Allianz, which has a 70,000 sq ft lease at Centennial Tower expiring next year, is said to be considering whether to renew its lease or relocate. Whichever option it picks, Allianz is said to be looking at expanding to as much as 100,000 sq ft. Colliers is also believed to be acting for Allianz. Industry players say potential major office leasing deals could come from Singapore Exchange, which is said to be mulling various space options. It is understood to be currently occupying about 170,000 sq ft at SGX Centre on Shenton Way under a lease expiring around mid-2014. If it doesn't stay put at its current location, it could relocate to new projects like CapitaGreen and Asia Square. JP Morgan, which occupies around 200,000 sq ft at Capital Tower on a lease that's expiring at the end of next year, is also weighing its options, including splitting its front and back-end operations, BT understands. Analysts suggest CapitaGreen, Marina Bay Financial Centre (MBFC) Tower 3 and Asia Square Tower 2 could be possible candidates for the front office, assuming the bank decides to move out of Capital Tower. CapitaGreen, which is being developed on the former Market Street Car Park site, will have about 700,000 sq ft NLA of offices when it is completed in second half 2014. MBFC Tower 3 was completed in March this year and has about 250,000 sq ft of space available. Asia Square Tower 1, completed last year, is said to have about 300,000 sq ft of offices available. The most recent leasing deals in the building include KKR for 7,500 sq ft and Royal Bank of Canada for 23,000 sq ft. Asia Square Tower 2 - which will be ready in Q3 2013 - will have about 780,000 sq ft of offices. Earlier this week, CBRE said that demand in Singapore's office market has been a lot more resilient than earlier thought, with positive net office absorption of about 473,200 sq ft achieved in the second quarter of this year, taking the first-half tally to about 1.06 million sq ft. The property consultancy is now in the midst of revising upwards its full-year 2012 forecast. It had earlier predicted there would be no change in net office demand. Source: Business Times