Friday, September 22, 2006
[RealEdge] BT : Shortage of office space set to worsen
| Published September 22, 2006  | ||||||||
| Shortage of office space set to worsen Tenants may retain current premises despite ORQ move
By KALPANA RASHIWALA
(SINGAPORE) The tight office supply situation building up here over the next three years may turn out to be more acute than envisaged, as major tenants like UBS and Deutsche Bank, moving into the new One Raffles Quay (ORQ) development, may decide to retain a chunk of their existing premises in places like Suntec City and DBS Tower 2.
Market watchers say the banks are adopting this strategy to set aside room for future expansion during a period when there's not going to be much new supply - until the first phase of the Business & Financial Centre is finished in 2010. 'So companies that make a strategic decision now to retain some excess office space will have an advantage over the competition when it comes to expanding in future to tap business growth opportunities, 'Banks operating here have been expanding their operations, not just in wealth management but also other areas like corporate investment banking, financial markets and global support centres,' she added. A Deutsche Bank spokesman said the bank is experiencing strong growth across all parts of its business in Singapore and Asia. 'Singapore is one of Deutsche Bank's largest offices in Asia-Pacific and serves as a strategic regional hub,' he added. The bank will retain 'about 100,000 sq ft of its existing tenancy portfolio in the CBD, to accommodate some infrastructure functions and to provide further flexibility for growth' after it moves into the ORQ early next year. Deutsche Bank now operates at Suntec City, DBS Tower 2, Ocean Towers and Temasek Tower. Sources expect it to retain its space in DBS Tower 2 but suggest it may give up the area it now occupies at Suntec City. Deutsche Bank will be the ORQ's largest tenant, occupying more than 280,000 sq ft spread over nine floors in the South Tower, which received a temporary occupation permit (TOP) in April. UBS will move in the second half of next year into the top 12 floors adding up to about 230,000 sq ft of the ORQ's 50-storey North Tower, which is expected to receive its TOP soon. But it will still need additional office space beyond what it has taken in the ORQ because 'Singapore is a very important market for UBS, where our wealth management, investment bank and global asset management businesses have seen strong growth over the years', said UBS Singapore chief operating officer Teo Lay-Sie. 'We will continue to explore options that can meet increasing space requirements, building resiliency, etc,' she added. The bank is said to occupy about 200,000 sq ft at Suntec City currently - the bulk of it in Suntec Tower 5. The space is under various leases that expire between next year and in 2009. However, industry sources suggest UBS may have the right to break these leases with six months' notice. However, market watchers expect UBS to retain a substantial amount of office space at Suntec City through lease renewals over the next few years. 'Suntec has been and is a great landlord. UBS has not made any decision and is looking at available options,' Ms Teo said. Colliers International said this week that average monthly gross rents for Grade A office space in Raffles Place have risen 34 per cent in the first nine months of the year. The uptrend is expected to continue due to a dearth of new space. DTZ's Ms Tan says that despite this, international banks find it cost-effective to house their regional and global operations in Singapore instead of locations like Hong Kong. | ||||||||
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