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Sep 20, 2007

Business parks in demand as firms seek cheaper offices

By Jessica Cheam

THE rapid rise of office rents in Singapore has spilled over to industrial properties such as business parks as tenants seek cheaper office options.

As a result, rents at industrial properties are rising, but not as fast as prime office space, which is in short supply, a new report has found.

The report, released by property consultancy Jones Lang LaSalle (JLL) yesterday, showed that rents in the central business district are a staggering 543 per cent above business park rents.

This has resulted in many companies relocating their back offices in the suburbs, said JLL Singapore's head of industrial, Mr Tahlil Khan, who wrote the report.

And with no significant new supply of office space coming online until 2009 and 2010,

Mr Khan said there will be a spillover of demand from the office sector, which will lead to higher rents for business parks and high-tech buildings - a hybrid of office and factory space.

Already, monthly rents at the Eightrium @ Changi Business Park are up 20 per cent at $3.50 per sq ft. JTC Corporation's posted rates for The Signature at the same business park have increased by about 8 per cent since the start of the year.

JLL's head of industrial for Asia, Mr David Wilton, said nine companies - local and multi-national - have approached JLL for built-to-suit projects, as there is not enough supply of business parks in the current market.

He added that JTC's anticipated sale of $1.6 billion worth of its assets, part of which will be pumped into a real estate investment trust (Reit), will change the market in terms of developing different types of industrial properties.

The Reit is expected to be listed by the second quarter of next year.