Source : The Straits Times, Feb 19, 2008 IDA, SLA making room for private businesses to ease office shortage. MORE help is on the way to ease Singapore’s office shortage, which has led to soaring rents.
At least two government agencies will give up their downtown offices to make room for private businesses that need more space.
The Infocomm Development Authority (IDA) will relinquish about a third of its 11,300 sq m office in Suntec City by moving some divisions to the Mica building in Hill Street by the end of the year.
Although it will still be close to town, IDA plans to move again in a few years to a ‘more appropriate location outside the central business area’ that can accommodate all its headquarters staff.
The Singapore Land Authority (SLA) is also planning to give up its seven floors at 8 Shenton Way, formerly Temasek Tower, although it has yet to find a new home. This is a considerably larger office space than the one IDA is vacating this year.
Other state departments may follow suit.
Finance Minister Tharman Shanmugaratnam said on Friday that the Government would move several agencies out of the central area by the first quarter of next year.
This will free up 20,000 sq m of precious prime office space for the private sector - equivalent to about 20 floors of a Suntec City office tower, Mr Tharman said in his Budget speech.
Although office space in the Republic is still cheaper on average than in Hong Kong or Tokyo, he said, the rate at which rents have risen has been ‘rapid and unsettling for businesses’.
Prime office rents shot up by 78 per cent on average last year, catapulting Singapore into the world’s top 10 most expensive office markets for the first time. The Republic jumped 10 spots to seventh place in the latest rankings, according to a report last week.
The Government has taken several steps to address the situation, including releasing temporary office sites and state properties , but these have had little noticeable effect so far.
Meanwhile, surging rents are also acting as a push factor for agencies that are relocating, especially those whose leases will expire soon.
The Economic Development Board (EDB), for example, is said to be firming up plans to move to Fusionopolis when its lease at Raffles City Tower is up next year.
Asking rents at Raffles City, where the EDB has been since 1985, have doubled in the last 15 months to about $17 per sq ft per month.
But other statutory boards that have ongoing leases - such as IE Singapore in Bugis Junction, whose lease extends to 2011 - will stay put.
Experts said this latest move would help relieve some of the immediate supply crunch, ahead of a slew of building completions expected in 2010 and beyond.
In particular, it will make things easier for firms already located in Suntec City or 8 Shenton Way that are looking to expand, said Ms Tay Huey Ying, director of research and consultancy at property firm Colliers International.
She added more agencies could jump onto the bandwagon.
‘Even those who own their own buildings could move out and lease out the offices, thereby releasing some space for the market and, at the same time, earning rental returns,’ she said.
Government offices still located downtown include the Ministries of Finance, Law, and Trade and Industry, all within the Treasury building in Hill Street next to Funan DigitaLife Mall.
There is ‘no real need’ for some of these departments to be in the central business district, and they could free up space for other occupiers who need the location more, said Mr Chua Yang Liang, head of research (South Asia) at Jones Lang LaSalle.
The $1.25 billion bid by Parkway Holdings - about five times that of rival Raffles Medical - for the Novena site on which the hospital will be built has raised concerns among investors that it is paying too much for the land..jpg)
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