Go West: Tech firms in Singapore setting up bases in south-western corridor

IN the last seven months, two of South-east Asia's best-known unicorns announced expansion plans with new addresses in the same neighbourhood.

Grab broke ground on a S$181.2 million built-to-suit headquarters with a gross floor area of approximately 455,420 sq ft in one-north. Scheduled for completion in Q4, 2020, it will enable Grab - currently in several locations across the island - to consolidate its operations. This facility will also house Grab's largest research and development (R&D) centre.

It will be joining gaming firm, Razer. The company is scheduled to complete its South-east Asia headquarters in one-north by mid-2020. The seven-storey facility, boasting some 210,000 sq ft of business park space, R&D labs and design studios, has the capacity to house more than 1,000 employees or 2.5 times Razer's current headcount.

It's not just the Singapore-based start-ups which have decided to go West. Google's relocation of its Asia Pacific headquarters from Asia Square Tower 1 to Mapletree Business City II, Alexandra Road, caused a stir in 2016. It has been reported that the tech giant took up a further 344,100 sq ft in the adjacent Alexandra Technopark. Earlier this year, Cisco, an American technology company best known for its networking products, moved from Changi Business Park into a new office at Mapletree Business City II, complete with an innovation centre and Cybersecurity Centre of Excellence. Chinese artificial intelligence solutions firm, Yitu, opened an R&D Centre in Mapletree Business City as well.

Why are technology firms congregating in the West?

Cost savings that come with cheaper rents is a key consideration. While the monthly gross rents of Grade A office space in the Central Business District (CBD) averaged around S$10.31 to S$10.79 per sq ft as of Q2, 2019, depending on the floor area leased, rents for good quality multi-tenanted business park space in Mapletree Business City, Singapore Science Park and one-north averaged around S$5.90 per sq ft.

The availability of large contiguous business premise options, ranging from ready-built multi-tenanted spaces (eg Ascent 5 in Singapore Science Park) to build-to-suit single-occupier facilities, with branding opportunity (eg Razer and Grab's new headquarters in one-north) is another significant factor. It would be challenging to achieve the same in the CBD, given the tight vacancy rate of 5.1 per cent for Grade A office space as of Q2, 2019,and the lack of affordable land zoned for Business Park use.

In addition, the corridor's proximity and easy accessibility to the CBD is a plus. It is well-served by the Circle MRT line while the Buona Vista and Harbourfront MRT Interchanges connect the area to the East-West and North-East MRT lines, respectively.

Amenities are in abundance within the corridor with the many hawker centres, cafés and drinking holes that dot the area. Shopping malls in the area include VivoCity, Harbourfront Centre and Star Vista. One-north, in particular, has successfully positioned itself as a thriving tech hub thanks to LaunchPad@one-north, a cluster of buildings geared towards nurturing start-ups. The chief of staff at Razer has also stated that one-north is a "vibrant hub for research and innovation for Singapore's knowledge economy", making it an ideal location for the company.

But there's no discounting the continued allure of the CBD. It remains a stronghold for reasons that include ease of talent hiring and retention and is dotted with big name tech firms like Netflix, Facebook, Twitter, LinkedIn, Amazon, Alibaba, Lazada and Microsoft.

Still, relatively affordable rents, availability of space options and continuing developments in the South West of Singapore, including the plans to transform the 2,000-hectare Greater Southern Waterfront into a futuristic mixed-use work-live-play waterfront district extending seamlessly from the CBD as outlined by the 2019 Draft Master Plan, could prove attractive enough to sway more tech firms to put down roots there in the future.