Massive rental gap seen between city fringe and rest of island business parks

Landlords are scrambling to upgrade their properties.

The two-tier market of business parks in the City Fringe and business parks in the Rest of Island has recorded a further divide in the third quarter of 2014, according to CBRE.

The rental premium has increased to 33% between City Fringe and Rest of Island business parks in Q314, from 29% a year ago. City Fringe business parks are located just outside the URA’s definition of Central Area including Alexandra and one north.

CBRE noted that this widening gap can be attributed to differences in quality and leasing interest as well as commitment rates between those in City Fringe and the others in the Rest of Island.

The business park buildings in City Fringe locations tend to be newer products with higher specifications and more importantly, have better connectivity due to its locations.

However, occupiers registered some interest in refurbished business parks with higher quality specifications in the Rest of Island.

With the need to back-fill space vacated by occupiers, landlords in older business parks have had to upgrade their buildings to match competition posed by the new buildings in this segment of the market.

This is besides having to price rents competitively. Older business park buildings including 1 Changi Business Park Avenue 1 and The Signature completed asset enhancements recently, triggering interest from cost-sensitive occupiers. The market recorded some increased level of leasing activity in these older business parks.

Based on CBRE’s basket, the average rent of business parks in the City Fringe stayed flat from the previous quarter, Q2 2014, at $5.50 psf/ month. Average rents of Business Parks in the Rest of Island dipped 2.6 per cent to $3.70 psf/ month.

“Occupiers are more keen on higher specifications, quality developments which the City Fringe has been able to provide. The location and connectivity are also important considerations which prompt occupiers to pay the premiums in rent. This flight to quality has hollowed out the older business parks in the Rest of Island, leading to the rent divergence,” said Michael Tay, Executive Director, Office Services

The people you want to reach are already in this room.

Every quarter, SBR lands on the desks of the founders, CFOs, and directors running Asia's most consequential companies. Every day, they open our newsletter and read our website. It's a room that took twenty years to build — and it's the one most of our partners are trying to get into.

The good news is that the door is open. We work with companies on thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. The shape of the right partnership depends on what you're trying to do, which is why we'd rather start with a conversation than send a rate card.

If you have something this room should know about, tell us. We'll tell you honestly whether we can help, and how.

No rate cards until we understand the brief. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia