Prudential In 14-Year Lease For Scotts Road Site

Source : The Straits Times, Feb 1, 2008

A BUILDING on Singapore's first transitional office site in Scotts Road will be completed in September at a cost of about $75 million.

LONG LEASE: Prudential has locked in an unusual agreement that allows it to lease a four-storey building (left) on Singapore's first transitional office site for 14 years instead of the usual three to five years. The insurance giant will pay $6.50 per sq ft - or about $975,000 - per month for the $75 million building. Mr Seah, the chief executive, says Prudential sees value in locking in a longer-term lease. -- PHOTO: KOP CAPITAL

The entire four-storey block has already been leased to insurance firm Prudential, which has locked in an unusual rental agreement that will last for an effective 14 years.

Prudential will pay $6.50 per sq ft per month for the building. At about 150,000 sq ft of space, that works out to $975,000 a month.

The agreement is unusual because most office leases are granted on a three-year basis - although this can range from two to five years - with an option for renewal.

In today's market of rising office rents, Prudential sees value in locking in a longer-term lease, explained chief executive Philip Seah.

Mr Seah said rents at the Scotts Road building would be half of what Prudential would have to pay to extend its current leases at Fuji Xerox Tower in Anson Road and at Bugis Junction, where it has a combined 130,000 sq ft of space.

Both those leases, as well as Prudential's third location at Singapore Post Centre, will expire this year.

The firm is seeking a replacement for the Singapore Post location, where it occupies 70,000 sq ft.

In the meantime, Prudential will give up the Fuji Xerox and Bugis spaces and relocate 2,500 of its more than 3,600 staff to the Scotts Road block, Mr Seah said at a ground-breaking ceremony for the building yesterday.

The Scotts Road site, which is being developed by KOP Capital, Hwa Hong Corporation and Dubai Investment Group, is the first and most successful of the Government's temporary office sites - an initiative launched recently to ease a shortage in office space.

The three other sites that were released garnered lacklustre response, with the latest not even awarded due to inadequate bids.