A major Japanese bank - The Bank of Tokyo-Mitsubishi UFJ (BTMU) - is in advanced talks to lease about 140,000 square feet of office space at Marina One, in spite of a generally subdued leasing market. BTMU currently occupies about 150,000 sq ft of office space in Republic Plaza. Though the take up space in Marina One is 10,000 sq ft lesser than at Republic Plaza, BTMU does not see it as a contraction of the bank's footprint, owing to more efficient space usage at the new development, due to bigger floor plates.
BTMU could be one of the first major office signings at M+S's Marina One project.
Marina One development will embrace 1.88 million sq ft of offices on levels 5 to 30 in two towers. Office floors in the East Tower will range from 35,000 to 43,000 sq ft, while those in West Tower will be 32,000-42,000 sq ft. The two towers will be connected on levels 28 and 29, creating 100,000 sq ft per floor.
According to industry insiders, gross effective monthly rents for big office occupiers at Marina One would probably be around $7 to $8 psf.
Meanwhile, Mitsubishi UFJ Securities, another entity of MUFG now sited in Republic Plaza, may join BTMU in migrating to Marina One.
Outside the CBD, Johnson & Johnson (J&J), a multinational corporation currently based at The Strategy in the International Business Park in Jurong East, is said to be finalising a lease for at least 170,000 sq ft of business park space at Ascent in Science Park 1 which will be completing this quarter. The lease is understood to be a long-term commitment of 10 years. J&J
According to market analysts, J&J could pay a gross effective monthly rental of about $5 to $6 psf at Ascent on a blended basis for the duration of the 10-year lease, against the approximate $3.50 to $3.80 psf it would pay if it will to renew its lease at The Strategy. However, for J&J, the relocation move could signify a flight-to-quality to a newer development, with an expansion built in.
Ascent located near Kent Ridge MRT Station, is a 7-storey building developed by Ascendas Land Singapore. It has a total net lettable area of 490,687 sq ft, of which about 90% is business park space.
Abott has signed a lease for about 100,000 sq ft at the Duo. Abbot looks to consolidate its three locations - HarbourFront Centre in the Telok Blangah area, VisionCrest along Penang Road and Gateway in Beach Road - into one. MasterCard has also inked a 70,000-sq-ft lease at Duo, and is expected to exit Gateway.
Meanwhile, Guoco Tower has clinched Dnb Asia, a shipping and offshore financing solutions provider that is currently housed at the nearby Axa Tower, for a space of about 15,000 sq ft.
The musical chairs trend started to emerge last year, though most of the actual vacating of space will happen in 2017 and possibly 2018 because these tenants are precommitting to space in new buildings that will be completed in the second half of this year and early 2017.
The key drivers for this migration to newer office developments are a flight-to-quality and occupiers consolidating from a few locations. Addtionally, landlords of new developments are offering attractive rental terms to select tenants amid the competitive leasing environment.
The office leasing deals that are currently brewing are mostly expected to be renewals or relocations, rather than involving new entrants and expansions. This implies little growth, if any, in net demand for island-wide office space.
Some foreign banks and tenants in the resources sector are in retreat and the overall weak global economic outlook is also denting office demand. This, coupled with the surge in new office completions over the next year or so, will continue to create downward pressure on rentals.
The spotlight now will be on the likes of ING, which is also in Republic Plaza, to see if it stays put or moves to a new development. In Centennial Tower, McKinsey & Co is mulling over whether to stay or move.
The World Bank, which is said to occupy about 16,000 sq ft at Marina Bay Financial Centre 2, is being courted by several landlords. The bank is understood to be looking for a bigger space of about 30,000-50,000 sq ft either in the same building or a new project.
There is still keen leasing interest in the market despite the economic uncertainty.