Demand for business park space up in Q1

INCREASED interest from infocomm, pharmaceutical and technology firms drove up demand for business park space in the first quarter, said consultancy CBRE yesterday.

Firms took up about 910,000 sq ft of space in the three months to March 31, mostly at Fusionopolis Phase 2A, which had secured pre-commitments of 80 per cent.

Food producer Fuji Oil Asia, for instance, took up 20,450 sq ft at The Galen in South Buona Vista while Japanese drugmaker Takeda Pharmaceutical Company took up 12,000 sq ft at the Biopolis at one-north.

Overall vacancies in the business park market, as a result, were 10.4 per cent in the three months to March 31, down from 11.7 per cent in the preceding quarter.

Mr Michael Tay, executive director of office services at CBRE, said this “bodes well” for the business park segment for the rest of the year, as a limited supply of such space without pre-commitments should lead to falling vacancies.

About two million sq ft of uncommitted space, in the next two years, will come from Mapletree Business City Phase 2 in Pasir Panjang and the Science Park in Buona Vista.

Refurbishments of older buildings, such as The Signature and Plaza 8 in Changi Business Park, and the Creative Technology Building in Jurong East, increased leasing activity in the first three months of the year, stemming a widening gap between rents at older and new business parks.

In Changi Business Park, for instance, Swiss bank UBS took up about 110,000 sq ft at Hansapoint while Chinese handset maker Huawei leased 20,000 sq ft at the Ultro Building.

This was also in part driven by the conversion of office space to retail space, said CBRE, which tracks business park space without pre-commitments in the city-fringe districts and outlying areas.

First-quarter rents in the city-fringe areas remained unchanged from the preceding quarter at $5.50 per sq ft (psf) a month. In the outlying regions, monthly rents were $3.65 psf in the three months to March 31, unchanged from the preceding three-month period.

However, Mr Tay cautioned that demand could be affected by uncertain economic conditions as well as the performance of the competing office market.

Other factors include demand from the technology sector, and whether it is “able to continue its momentum” after “a swathe of expansion over the past 12 months”, he said.

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