Singapore 7 December 2017 - The wave of new supply in the Central Business District (CBD) has prompted the majority of tech firms setting up operations in Singapore to take up space there, according to CBRE’s latest Asia Pacific Technology Report.
Tech companies remain one of the main drivers of new and expansionary demand in the Singapore office market. Firms operating in the transport, fintech and online payment sectors have been most active in securing and enquiring for space. The CBRE report tracked transacted office leases since Q1 2016 to the third quarter of 2017.
Michael Tay, Executive Director CBRE’s Office Services said “Expansion is being fuelled by the need to gain first-mover advantage as well as to consolidate market share in Singapore and South East Asia”.
The bulk of the leasing activity in recent quarters has been focussed in the CBD with location continuing to play a key role in attracting and retaining talent. The fact that more than 75 per cent of the new supply from 2016 to 2018 are in the CBD is key to this locational gravity. Despite this trend, decentralised office/business park locations with good connectivity and amenities should also appeal to this industry group.
The largest leasing deal in 2017 to date was completed by a U.S. social media firm, which took up approximately 300,000 sf at Marina One. Other top-tier tech firms have taken advantage of the office rental trough to expand and upgrade their buildings and premises. Another U.S. tech MNC pre-leased 125,000 sf at Frasers Tower. GrabTaxi took up 100,000 sf at Marina One and Wirecard relocated to a 25,000 sf space at Mapletree Business City II. Business parks remain a viable option for tech firms. Newer and higher quality developments in One North and Mapletree Business City are receiving the most interest as they fulfil both locational and quality requirements.
Mr Tay added “Tech firms will remain a key demand driver, although in the short term, the pace of growth may slow following the exponential growth seen in the last 24 months. Nevertheless, the tightening of supply from 2018/2019 will lead to escalation of rents. On this backdrop, tech firms continuing on the path of growth will need to make decisions quickly.”
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