As the global banks in Singapore restructure and downsize their offices in the central business district (CBD), a crop of tenants – new media, consumer products and insurance companies – have steadily taken over.
Global finance houses, comprising banks and private equity firms, still take up three-fifths – a massive 11 million square feet – of downtown office space, but their expansion has slowed markedly.
Chris Archibold, JLL’s head of markets in Singapore, said: “From 2005 until slightly after the global financial crisis, the financial houses were major contributors to the net take-up in Singapore, but now, they are no longer contributing to the take-up.”
These global financial houses have given up 500,000 sq ft of space in the city in the last three years. For example, Barclays has given up two floors in Marina Bay Financial Centre, and LinkedIn has moved in.
Credit Suisse is said to be planning a phased exit from One Raffles Quay this year; Citibank is looking into releasing some space at its Capital Square office.
Mr Archibold said: “Banks have been shrinking their capital-intensive businesses such as investment banking, as a result of regulations put on them since the financial crisis.
“Compliance requires them to hold more capital, which makes these businesses less profitable. Banks are now more focused on costs than ever before because margins are down for a lot of their core and non-core segments. They are thus less prepared to hold onto surplus space.”
Among the newer downtown tenants is Google, which has expanded its Asia-Pacific headquarters here, taking four floors in Asia Square. The same Marina Bay building now also houses a cluster of re-insurers such as Swiss Re and SCOR.
Twitter, Booking.com and eBay have all been opening new offices or expanding existing ones.
PayPal is housing its international headquarters in Singapore, split between Suntec Tower 5 and Millenia Tower; Facebook plans to double its space at 158 Cecil Street.
The mix can make for strange bedfellows.
Hugh Andrew, who heads asset management for the Asia-Pacific at BlackRock, which owns Asia Square, said: “You have this very bizarre dichotomy of Citibank bankers in their shiny shoes and guys in flip flops and shorts in the same elevator.”
General Motors has moved its Asian headquarters from Shanghai to OUE Bayfront, taking over 30,000 sq ft from the Bank of America Merrill Lynch.
Insurer Aon is building its Asia-Pacific hub in SGX Centre, and toy maker Lego has set up office in Marina Bay Financial Centre.
From the landlords’ perspective, the diversification is a plus because it makes their properties less susceptible to the peaks and troughs of financial market cycles.
Retailers in the CBD also welcome the new tenant mix; the new-media firms, especially, do not necessarily operate on the traditional Monday-to-Friday, 9am-to-5pm routine, so they can provide a catchment to support a seven-day trade.
Most CBD retailers are now open only five days a week.
To be sure, no other industry comes close to owning the space the global financial houses still occupy. The new industries are not replacing them “by any stretch of the imagination”, said Mr Archibold.
But the phenomena of global banks’ shrinking spaces is not peculiar to Singapore; it is also playing out in the major financial centres of Hong Kong, London and New York.