DBS Weighing Up Mega Lease Deal At Posh New Address

Source : The Business Times, October 16, 2007

Bank eyeing phase 2 of Marina Bay Financial Centre

It could be Singapore's biggest office leasing deal ever - if it gets sealed. DBS is said to be in advanced stages of negotiating to lease up to one million sq ft at Marina Bay Financial Centre's (MBFC's) phase 2. If concluded, this could put into the shade the deal for 508,298 sq ft that Standard Chartered Bank signed in April for MBFC's phase one, which will be ready in the first quarter of 2010.

Hot spot: DBS said to be in talks to lease up to 1m sq ft at Marina Bay Financial Centre's phase 2

The second phase of the project, slated for completion in late 2011, includes a high-rise tower that will have around 1.4 million sq ft of office space. DBS is expected to pay a gross monthly rental of around $10 per square foot, according to industry players.

Stanchart's lease inked earlier this year reflects an effective rent of about $8 psf, they added.

BT understands that the exact quantum of space that DBS will take at MBFC's second phase has not been finalised and it may well be less than one million sq ft if the bank decides that it makes more economic sense to find some cheaper space elsewhere. One million sq ft is roughly three quarters of the office space at One Raffles Quay, which was completed last year.

Sources say that in addition to MBFC's phase 2, DBS is scouting for around 300,000 sq ft of space for backroom operations. Sources tipped Changi Business Park as being the most likely candidate, although Alexandra Distripark, which is being transformed into a business park, may also be a contender.

Currently, some of the bank's backroom operations are housed at a building within the Alexandra Distripark complex, called The Comtech, where DBS occupies about 100,000 sq ft. The bank also leases more than 100,000 sq ft for backoffice functions at Technopark @ Chai Chee.

In the Central Business District, DBS's operations are housed primarily in leased premises at DBS Building Towers One and Two on Shenton Way, and at PWC Building at Cross Street. The bank owns a stake in the latter property and is said to occupy about 100,000 sq ft there for its asset management and stockbroking businesses. It is believed to occupy about 600,000 to 700,000 sq ft at DBS Building Towers One and Two. The bank used to own the towers until it sold them to a Goldman Sachs real estate fund in late 2005 and leased back the space it occupied for an initial eight-year term with options for renewal.

The initial lease term will expire around late 2013 which suggests a period of overlap with the lease the bank is negotiating for MBFC phase 2. 'It makes sense for DBS to move to MBFC in the more prestigious Marina Bay location as this will be Singapore's new financial district and where many major foreign banks will have a presence,' an industry observer noted.

MBFC's Phase 2 will comprise the Marina Bay Suites residential project, slated for launch early next year, and the high-rise office tower where DBS is negotiating to be anchor tenant and which is expected to have about 1.4 million sq ft of offices.

The project's first phase comprises the Marina Bay Residences and two office towers, 33 storeys and 50 storeys high with about 1.6 million sq ft of net lettable area.