It has become difficult for the owners of the two just completed strata office buildings. Meanwhile, there is a solution in sight as more projects are likely to start.
Just about 56 out of 556 office units have been rented at Paya Lebar Square after its completion in the last quarter of last year.
Only one of the 32 office units has been rented out at Robinson Square that was completed last month. Paya Lebar is left with a few units while despite being in the central business district (CBD), Robinson Square is fully sold.
Agents observed that asking for a monthly rent of $6.50 or $7 per sq ft (psf) has been dropped.
At the project, the average rent over the last six months has remained at $5.87 per sq ft per month for units between 480 sq ft and 43,000 sq ft or entire floor space. It could also reduce to $5 psf per month, according to the agent. He further stated that quite a lot of owners bought several units at Paya Lebar Square. But they were disturbed about the low response because of the high number of units.
Owing to the fact there is no apparent industry supply chain to draw companies, the expansion of Paya Lebar as a business centre has not begun.
For instance, in Tampines, its expansion as a business centre was successful when several financial institutions started serious retail banking operations after a service centre was set up there by the Central Provident Fund.
A man who prefers to be anonymous has two units at Robinson Square. He is sore worried because he is yet to make his asking rent $9 or $10 psf per month which was previously promised when he purchased the units at $2,800 psf.
He said he did not know if he would be able to get kind of amount, that asking rent has fallen to as low as $7.20 psf per month. Moreover, the limited car park space for the building has been a turn-off for potential tenants like a shipping company and a law firm.
Until the year-end, the market players opined that there would be a scarcity of CBD space. It may be a harder time for landlords because of an estimated 4 million sq ft of office space expected to be placed on the market next year, explained Ms Christine Li, a Cushman Wakefield research director.
Also, about 1.59 million sq ft of secondary and shadow space, excess space already leased by tenants but they desire to sublet, will hit the market in the next two years, she disclosed.
Fresh strata office units that are yet to be finished in the CBD in some years to come – PS100, Eon Shenton, SBF Centre, and Oxley Tower, have almost been completely sold. But sales at Crown at Robinson, the former Chow House have been slow. Last month, the 86-unit scheme was launched and about seven units have been sold. The reason could be the mechanical car park that makes it take more time for vehicles’ entry and exit, said market observers.
However, the market stays varied, with units of smaller sizes offering chances to smaller cap investors, while experienced investors and owner occupiers frequently seek finished jobs having a sizeable floor plate, said CBRE associate manager of investment properties, Ms Sammi Lim.