Frasers Tower attracts diverse sectors

Singapore

FRASERS Centrepoint Limited (FCL) said it has received interest for some 30 per cent of office space at new office development Frasers Tower, which was officially launched on Tuesday.

This includes its first pre-lease commitment of 20,000 sq ft inked with regional serviced office provider The Executive Centre, which is taking an entire floor.

The 235-metre tall development at Cecil Street will have a total 663,000 sq ft of net lettable office space in its 38-storey tower and 22,000 sq ft of net retail space in an adjacent three-storey retail podium featuring mainly F&B offerings.

FCL head of commercial Low Chee Wah told reporters that interest for the office space hails from diverse sectors including conglomerates, legal services and technology. A majority are existing companies in Singapore looking for more efficient office space to relocate or expand, he added.

The column-free floor plates in Frasers Tower are between 20,000 and 22,000 sq ft, which can accommodate up to 300 persons per floor. FCL group will take up some space in the tower as its city office while Alexandra Point remains its headquarters.

Addressing concerns over current pressures on office rents, Mr Low said he expects rents will reach a bottom in the middle of this year and strengthen in the second-half of 2017, since large competing projects like Guoco Tower is already close to 90 per cent filled and Marina One is about 60 per cent pre-leased.

Consultants polled by The Business Times in December were expecting prime office rents to drop by up to 10 per cent this year and most are tipping a recovery in 2018.

But from a supply standpoint, things are looking better now, said CBRE managing director for advisory and transaction services Moray Armstrong. CBRE is jointly marketing Frasers Tower with JLL.

The huge supply wave in 2016 and early 2017 is "already largely passing and dissipating", he said. "With that, we see market is likely to strengthen in next two to three years, so Frasers Tower is going to be playing into a strengthening market."

The 1.15 million sq ft of net take-up for office space islandwide last year was slightly lower than the 10-year average - signalling a healthy year for the office market, Mr Armstrong added.

JLL head of markets Chris Archibold noted that strong acquisition interest in office space reflect investors' expectations of future upside in office rents and long-term confidence in the office market.

"Rents will be in line with market and the other prime Grade-A products, and what we are looking at is a building that works quite well for occupiers - it is very efficient. If you look at the (tenant) movements in the past 12 to 18 months, it has been a flight-to-efficiency rather than a flight-to-quality."

Office projects also tend to see stronger leasing activities in the 12 months leading to their completion, Mr Archibold said.

Timing-wise, that may well work out for Frasers Tower, according to Mr Low. The project will be completed in the second quarter of 2018, when the office market is tipped to be recovering.

Frasers Tower will have a park that is linked to Telok Ayer Park and its office lobby will be directly connected to Tanjong Pagar MRT station via an underground pedestrian walkway.