MNCs snap up prime office space

Loh Chee Kong cheekong@mediacorp.com.sg

TODAY
323 words
5 September 2008
TODAY (Singapore)
AM & PM
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English
(c) 2008. MediaCorp Press Ltd.

DESPITE the sluggish economy, downtown office rentals show no sign of budging from
high, with multi-nationals seemingly largely unfazed by top dollar demands for
prime space.

Yesterday, office landlord CapitaCommercial Trust (CCT) announced that mining

giant BHP Billiton had renewed its lease at Capital Towers, while JPMorgan Chase
expanded its premises by one-and-a-half floors in the same building.

Also, Korea’s Shinhan Bank has taken up new space at One George Street, which
comes under CCT’s portfolio as well. That’s a total of 77,900 sq ft. These leases
will run between two to three years.

The newly-committed, “higher end” rentals are between $16 and $20 psf per month, a
CCT spokesperson said. Still, they “are in line with the rental rates achieved at
comparable Grade A office buildings in the respective micro-markets”.

CB Richard Ellis reported that the average Grade A office rental stood at $18.80
psf per month in the second quarter of this year, up 15 cents from the preceding
quarter.

Although it has not been unusual for office rents to hit $20 psf per month at the
peak of the property bull run, “nowadays, it’s less common”, said Knight Frank
research director Nicholas Mak. “You also have to look at the age and the quality
of the building. Capital Tower is the newest building in that part of Robinson
Road.”

Ms Lynette Leong, chief executive of CapitaCommercial Trust Management, described

the latest transactions as “a vote of confidence”.

Looking ahead, analysts expect central business district space constraints to ease
as more firms and Government agencies move out to cheaper decentralised areas and
new supply comes on stream.

Still, Cushman & Wakefield managing director Donald Han expects rents to stay firm
for the next 12 to 24 months as the market remains “fairly tight”.