Occupancy At Business Parks Hits Five-Year High

Source : The Business Times, April 4, 2008

Office space crunch also lifts high-tech space occupancy to 94.1% at end of Q1

The average occupancy rate for business parks has hit a five-year high, crossing the 90 per cent mark.

According to a report by CB Richard Ellis (CBRE), the occupancy rate grew from 89.4 per cent at end-2007 to an estimated 90.2 per cent at end-March 2008, exceeding 90 per cent for the first time in five years.

This was attributed to the current tight availability of office supply in the CBD which saw financial institutions like Standard Chartered Bank, Credit Suisse and Citibank relocating part of their operations to Changi Business Park.

The office space crunch also pushed the average occupancy rate for high-tech space up by 1.3 per cent quarter on quarter to 94.1 per cent at the end of first quarter 2008.

CBRE director of industrial and logistic services Bernard Goh pointed out, however, that while the average occupancy rate for business parks is expected to grow, it would be at a ‘less robust pace compared with high-tech space’.

‘This is due to the healthy pipeline of upcoming business parks in the next four years,’ he said.

Mr Goh said some six million square feet of business parks are expected to be completed from 2008 to 2011. In comparison, only 1.5 million sq ft of high-tech space is expected to come onstream in 2011, explained Mr Goh.

Correspondingly, Mr Goh expects the growth in rental for high-tech space to continue to grow at a healthy pace.

Average monthly rent for high-tech space rose 7.3 per cent quarter on quarter to $2.95 per square foot (psf) by end-March, up from the 5 per cent quarter on quarter increase seen in the first quarter of 2007.

DTZ Debenham Tie Leung also sees more business park development projects in the pipeline.

In a report released yesterday, it said that the potential supply of business park space was 2.7 million sq ft as at end-2007, 10 per cent of total potential supply of private industrial space.

DTZ also noted that average monthly gross rents for business/high-tech industrial space rose 7.7 per cent quarter on quarter to $4.20 psf per month.

Generally, private industrial stock increased marginally by 0.7 per cent quarter on quarter to 299 million sq ft as at end-2007, with about 1.69 million sq ft of net lettable area of new private industrial space added in 4Q 2007, said DTZ.

However, DTZ has projected 7.13 million sq ft of new supply of private factory space for 2008. Subsequently, it is projecting a further 8.35 million sq ft, 2.77 million sq ft and 1.38 million sq ft for 2009, 2010, and 2011 respectively.