Google, Microsoft could head to MBC II

Singapore

THE attraction of a spanking new business park development in the suburbs at about half the rentals of Grade A CBD offices could lure Google, Microsoft and other tenants to the second phase of Mapletree Business City.

Located in the Pasir Panjang Road/Alexandra Terrace area, Mapletree Business City II (MBC II) will have about 1.15 million square feet net lettable area (NLA) of business park space when completed. The project is slated to receive Temporary Occupation Permit around the middle of next year.

BT understands that Google is in the advanced stages of sealing a lease for about 200,000 sq ft or more at MBC II - which will provide a more campus-style suburban setting for the Internet search-engine giant.

Google is expected to bid goodbye to its funky offices at Asia Square in Singapore's financial district, where its lease will expire in late-2016.

The tech heavyweight occupies four levels at Asia Square Tower 1 totalling around 120,000 sq ft. Another stack of three floors or 100,000 sq ft is available in the building - for Google to expand, had it decided to remain at Asia Square, say sources.

Office leasing agents say Google can expect to pay at least S$11 per square foot (psf) in monthly rent if it renews its lease at Asia Square - compared with the S$5-plus to S$6-plus psf range at MBC II.

The significant rental savings in making the move would help offset the substantial investment the tech giant made fitting out its Asia Square offices. Among other things, there are themed eating areas - including one that resembles a Peranakan-styled shophouse and another with a Balinese concept - where staff can hang out. Unique meeting spaces have also been designed, including a tuk-tuk (three-wheeled vehicle) converted into a small meeting spot, and another inspired by The Orient Express. There is also a Hammock Room.

Signs also point to Microsoft mulling a relocation to MBC II. Its lease at One Marina Boulevard in the CBD, where it occupies slightly more than 100,000 sq ft, is also said to be ending towards the end of 2016.

In addition, the software giant has a lease for about 30,000 sq ft at Alexandra Technopark (next to MBC II) that runs out in early 2017. Word on the street is that Microsoft could occupy 100,000-120,000 sq ft at MBC II. "This would not be a contraction of its Singapore footprint as MBC II will have more efficient floor plates allowing more staff to be accommodated," said an industry observer.

Healthcare technology and medical supplies provider Covidien, situated at Visioncrest Commercial in Penang Road, is also believed to be eyeing about 56,000 sq ft at MBC II.

MBC II will comprise three low-rise blocks (of five, six and eight storeys) of stepped terrace podium connected to a 30-storey tower, which will be one of the tallest business park buildings in Singapore and afford commanding views of the southern waterfront corridor and surrounding greenery.

Savills Singapore executive director (commercial) Marcus Loo said: "They have a great product, similar if not better than the existing first phase of MBC. There will be no shortage of interest for this development because of a lack of good quality, non-CBD buildings with big floor plates."

Based on Urban Redevelopment Authority's (URA) guidelines, tenants in business park developments must ensure that at least 60 per cent of the leased area goes towards approved uses such as high-tech manufacturing, R&D, product design/develop-ment, data processing and e-business. The remainder can be for ancillary offices, childcare facilities, showroom, canteen and other approved uses.

"Tech companies would definitely find it very attractive to go to MBC II, where the quality will be similar to any Class A office building. However, business park space is not suitable for standard office users, for instance insurance, shipping, commodities, and oil and gas companies," said Mr Loo. Backroom processing operations of banks, though, may be housed at business parks.

For those who qualify for business park use, there are "tremendous cost savings" compared to leasing offices, Mr Loo noted.

Examples of companies that have taken this route in recent years include Canon, which moved from Keppel Bay Tower in the Harbourfront area to Galaxis in one-north, and Oracle, which also relocated from Suntec City to Galaxis.