Wednesday, January 03, 2007
[RealEdge] BT : Govt depts in CBD urged to streamline use of space
| Published December 28, 2006  | ||||||||
| Govt depts in CBD urged to streamline use of space This could help alleviate office space crunch, curb rent rises: Colliers
By KALPANA RASHIWALA
PROPERTY consultant Colliers International yesterday suggested that government departments located in the Central Business District (CBD) rationalise their use of office space and streamline their operations wherever possible to release much-needed space for the private sector.
This could help alleviate the short-term shortage of office space and dampen rental escalation which, if unchecked, could jeopardise Singapore's ambitions of being a global financial hub, the firm warned yesterday. 'It is of paramount importance that the relevant authorities look into ways to alleviate the short-term shortage of good-quality office space,' the firm's director for research and consultancy Tay Huey Ying said in a release yesterday. Colliers said the Singapore office market saw net new demand for 2.9 million square feet this year - the highest level in six years - and this pushed up rental rates significantly across most key micromarkets on the island. Average gross monthly rents across the various key office micro-markets will end the year anywhere between 33 per cent and 69.5 per cent higher than a year ago. 'Prime rents are likely to face immense upward pressure given the limited supply of Grade A office buildings scheduled for completion in year 2007,' Ms Tay said. Colliers predicts that the average monthly gross rent of Grade A office space in Raffles Place, which has leapt 66.5 per cent over the past 12 months - from $5.17 per square foot (psf) in 2005 to $8.61 psf this year - will breach 1996's all-time high of $9.77 psf by the first half of next year and reach $12 psf by the end of next year. This reflects an annual escalation of nearly 40 per cent. In the fourth quarter of this year alone, the increase was an unprecedented 24.4 per cent over the preceding quarter. In fact, in almost all micromarkets, the quarter-on-quarter gains ranging from 17 to 37.6 per cent recorded in the October-to December period of this year were the biggest increases since the office market bottomed out in Q1 2004, Colliers observed. Booming demand for offices as international banks, MNCs and domestic companies expand their operations and a slowdown in building new office projects during the office glut a few years ago have combined to boost office rents across Singapore. This year's 2.9 million-sq-ft net new demand for offices is higher than the annual average of 1.3 million sq ft for the preceding 10-year period. On the supply side, net new supply of offices this year is estimated at 1.05 million sq ft, lower than the average annual figure of 1.73 million sq ft between 1996 and 2005. New office supply is expected to nosedive over the next few years until the first phase of the Business & Financial Centre is completed in 2010. 'If rents continue to rise unabated amidst shortage of good-quality office space, Singapore's drive to be an international financial centre may be undermined and our competitiveness could erode to some extent, as the lack of quality office space will limit current companies' expansion plans and potentially drive away prospective new entrants into Singapore,' Mr Tay said in the release. Last week, the Ministry of National Development (MND) stepped up the supply of office sites in its latest six-monthly review of the Government Land Sales (GLS) Programme. Three confirmed list sites slated to be launched for tender in the first half of next year will help boost the supply of offices - a plot at Central Boulevard right behind City Development' In addition, three reserve list sites will also boost office supply - two at Anson Rd and one above Outram Park MRT Station. But Ms Tay argues that due to the time lag required for construction, releasing land via the GLS Programme will 'not be a viable option in overcoming the short-term supply crunch'. In its announcement last week, the MND also mentioned that outside the GLS programme, there will be nearly one million sq ft that can be leased in vacant state buildings catering to demand for office and commercial school space in the first half of 2007. However, Colliers in its report yesterday noted that the 'leasing of vacant State properties, which are suitable for interim office use by the private sector, is only practical in meeting demand to a small degree and will only cater to business operations that do not need to locate in the CBD. 'One feasible option is for the various government departments, particularly those located in the CBD, to rationalise their office space usage and streamline their operations wherever possible; thereby, releasing the much-needed office space for the private sector. This will certainly help to relieve the current tight office supply situation,' Ms Tay said. Government bodies located in the CBD include the Monetary Authority of Singapore at Shenton Way, the Ministry of Manpower at Havelock Rd, the Singapore Land Authority at Temasek Tower and the Urban Redevelopment Authority and the Ministry of National Development at Maxwell Rd. Many of these ministries and state agencies are housed in their own buildings. | ||||||||
Change settings via the Web (Yahoo! ID required)
Change settings via email: Switch delivery to Daily Digest | Switch format to Traditional
Visit Your Group | Yahoo! Groups Terms of Use | Unsubscribe
__,_._,___
