Lazada/Alibaba and TikTok figure in latest office-leasing deals
Singapore
DESPITE the challenges to office leasing demand amid the recession and the work-from-home trend during this pandemic, one can still count on e-commerce and tech players for some good news.
Lazada and its parent Alibaba Group have signed up for 140,000 sq ft at 5One Central in Bras Basah Road.
Alibaba entities, including Lazada, are expected to move to the new address later this year from AXA Tower, which is to be redeveloped. Alibaba Singapore took a 50 per cent stake in Axa Tower, which is near Tanjong Pagar MRT station, last year. Savills Singapore is understood to have acted for Lazada and Alibaba for the leasing deals at 5One Central , but declined to comment.
Meanwhile, TikTok, a unit of Chinese firm ByteDance, continues to expand its footprint here. It is understood to have leased two floors totalling around 58,000 sq ft at Guoco Tower in Tanjong Pagar. The space was previously leased to Dentsu Aegis Network, which continues to occupy slightly more than a floor in the building. Word on the street is that CBRE brokered this deal, but it declined to comment.
Observers think the monthly rental rate is likely to be around S$11 per square foot.
TikTok also has a sizeable presence of nearly 100,000 sq ft in the South Tower of One Raffles Quay (ORQ). It initially committed to two floors totalling about 64,000 sq ft in late-2019; then it took up about 21,000 sq ft more space in the second half of 2020, and, more recently, nearly 13,000 sq ft more.
The Business Times understands that JLL brokered the leasing deals for all the above three tranches of space, but declined to comment. Market observers believe the gross effective monthly rental rates are likely to be in the low-S$10 psf range.
Of the 140,000 sq ft Lazada and Alibaba have signed up for at 5One Central, about 105,000 sq ft is being leased from the building's owners, ARA Asset Management and Chelsfield; this space is spread over three full and two partial office floors and a small area on ground level.
The remaining 35,000 sq ft - an entire floor - was taken up as an enterprise solution offering from flexible space operator JustCo, which is already in the building.
Leases for both spaces will run for six years starting late this year.
The 11-storey 5One Central - flanked by Bras Basah MRT station on the Circle Line and Bencoolen station on the Downtown Line - is undergoing refurbishment, which is expected to be completed by the end of the third quarter of this year.
The gross effective monthly rental for the Lazada and Alibaba space is understood to be in the high-S$8 psf range. At AXA Tower, Lazada has a lease for 130,000 sq ft over 10 floors, including about 30,000 sq ft occupied by Alibaba.
Alibaba Singapore will jointly redevelop AXA Tower with Perennial Real Estate-led consortium members, who continue to own the remaining half stake in the property.
Alibaba Group is expected to end up owning the bulk of the office space in the new mixed development, with a view to occupying it.
CBRE's average monthly rental value for its Grade A CBD Core Singapore office basket fell 10 per cent last year to S$10.40 psf. For this year, the property consulting group projects the rental figure will increase 1.4 per cent, with the growth coming in towards the tail end of 2021.
The property consulting group's Singapore managing director Moray Armstrong said that the office rent correction through last year presented "real value" to tenants, stimulating leasing activity.
He added: "While it seems counter- intuitive, we have recently seen a few instances of fairly stark competition between tenants looking to secure deals on quality space. Consequently, the range of available office space options to prospective tenants has reduced. There are plenty of large pipeline leasing deals that will demonstrate the point.
"While it is fair to point out that a proportion of the increased market activity has been driven by occupier displacement from upcoming redevelopment projects, this belies the fact that we are seeing growth selectively across technology, asset management and the consulting sector."
