CPF Board moving to Novena Square

[SINGAPORE] The biggest office leasing deal so far this year has been inked: CPF Board is said to be taking close to 210,000 sq ft at Novena Square's two office towers that will be vacated by Procter & Gamble (P&G) when its leases expire in mid-2015 and 2016.

P&G is moving to The Metropolis in Buona Vista, where it has signed a lease agreement for about 210,000 sq ft.

CPF Board is believed to have inked a long-term lease at Novena Square, with options for renewals. Market talk is that the rental is likely to be $7-plus per square foot a month.

The board will be relocating its offices out of its ageing namesake building at 79 Robinson Road, one of the oldest landmark buildings in the old financial district. The 40-odd storey building's net lettable area (NLA) is believed to be around 325,000 sq ft.

When contacted, CPF Board confirmed it has signed a lease agreement to rent space at Novena Square Towers for its operations starting from the fourth quarter of next year.

"Under the confidentiality clause in our lease agreement with the landlord, we are unable to disclose details of the lease. While CPF offices housed at CPF Building will be moving to Novena Square, the CPF Main Customer Service Centre will remain at the CPF Building. Tenants will also continue to operate at the CPF Building," said the CPF Board spokeswoman.

"The relocation will free up prime office space in the Central Business District for higher-value uses. CPF Board is evaluating options that will maximise the value of the building," she added. The stat board's offices currently occupy 70 per cent of the building.

Talk in the market is that the board is mulling over a sale of the building, which is on a site with a balance lease term of about 53 years.

The property has redevelopment potential. The property has a land area of about 47,000 sq ft and is zoned for commercial use with a maximum 50-storey height. Its maximum plot ratio is 12.88 (inclusive of bonus plot ratio for the site's size and its proximity to Tanjong Pagar MRT Station), which means the property can be redeveloped into a new project with a maximum gross floor area of about 606,000 sq ft.

A new development will also be more efficient, extracting a higher ratio of NLA to gross floor area.

BT understands that CBRE arranged CPF Board's lease at Novena Square, but the property consultancy group declined to confirm this.

Market watchers note that CPF Board will not be the first government agency to relocate its offices out of the CBD. The move was kickstarted by Singapore Land Authority in 2008, when it moved from 8 Shenton Way to Revenue House, opposite Novena Square. Later this year, Building and Construction Authority and the Agri-Food & Veterinary Authority of Singapore will move from MND Building in Maxwell Road to leased premises at Jem office tower next to Jurong East MRT Station.

The initiative for some government offices to move out of the CBD was announced in early 2008 to release prime office space for private-sector use amid an acute shortage of such space at the time. An office industry market watcher reckons that although there is no office crunch at the moment, "that directive has never gone away".

Novena Square is majority owned by UOL Group. In 2011, UOL's hotel arm Pan Pacific Hotels Group inked a 30-year lease agreement with the Attorney-General's Chambers to lease One Upper Pickering, a 15-storey office building with 87,067 sq ft floor area that was completed in late-2012. That deal involved an upfront lease premium of $127.2 million (based on net rent, not counting service charge).

BT understands that CPF Board's lease agreement at Novena Square does not entail an upfront lease premium. The lease duration is also said to be shorter.

Novena Square, completed 14 years ago, has two offices towers of 18 and 25 storeys adding up to 446,713 sq ft NLA, and a 173,525 sq ft retail podium.