More leasing activities are reported as the office market starts to pick up post-COVID-19. However, tenants are also very specific in their office space requirements.
By Khalil Adis
In May 2022, I secured my very first corporate leasing deal.
Although I was elated to finally secure a tenant for the landlord, it was not an easy process especially since the office market was affected by Covid-19.
I was faced with a challenging period when marketing the office space in late 2021 as Singapore was battling the delta variant then.
While interest in office space at first increased, the Omricon variant threw the wrench for potential tenants looking for office space in November 2021.
As a result, enquiries started to decrease until the early part of 2022.
Fast forward, a year ahead, the office leasing market appears to pick up steam as more employees returned to work.
Data from CBRE confirmed this showing strong positive office net absorption in the third quarter of 2022, bringing the year-to-date take-up to 0.56 million sq ft and surpassing the total take-up of 0.32 million sq ft for the whole of 2021.
“Key demand drivers are expansions by tech firms, flexible workspace operators and non-banking financial companies, which took up significant secondary office space in the Core CBD (Grade A). Fresh pre-commitments to upcoming new projects such as Guoco Midtown and Central Boulevard Towers were also inked during the quarter,” its research notes.
Broad-based demand in all micro markets
In addition to the growth sectors, CBRE notes that tenant displacement from planned redevelopments such as Clifford Centre and Robinson Point has also contributed to a broad-based recovery.
According to the firm, islandwide vacancy declined further to 4.9 per cent in the third quarter of 2022 from the previous high of 6.8 per cent from the same period last year.
“Despite hybrid working arrangements likely to stay, total leasing volume from renewals, new setups and expansion over the past three quarters has been resilient, a testament that physical office still plays an integral role in the workplace ecosystem,” CBRE’s research cites.
With more leasing activities reported in the third quarter, here are the five things corporate tenants look for in an office space.
#1: A prestigious address
From my experience, certain tenants, particularly those in the banking, real estate, energy, legal and tech sectors, would only look for a prestigious office address right in the CBD.
This is because their corporate image is important especially since they mostly deal with multinational companies and government agencies.
Some are also particular about the look and feel of the building’s main lobby as they may sometime hold meetings with important clients in their office.
Others cite improving their staff’s morale and confidence in the company when having a prestigious Grade A CBD address.
Accessibility is also a key consideration for corporate tenants as most of their staff rely on public transportation while some drive to work.
Therefore, being connected within walking distance to the MRT stations and expressways are important.
As the office unit that I was marketing is located within the CBD, accessibility is not an issue as it well-served by various train stations such as Tanjong Pagar and Raffles Place MRT stations on the East-West and North-South Line, Chinatown, Telok Ayer MRT stations and Downtown on the Downtown Line as well as newly opened Maxwell and Shenton Way MRT stations on the Thomson-East Coast Line.
The office building is also easily accessible via the Ayer Rajah Expressway (AYE), Marina Coastal Expressway (MCE), Central Expressway (CTE) and East Coast Parkway (ECP) for those who drive.
Amenities or the lack of them can either make or break an office leasing requirements for a corporate tenant.
Some of the important amenities they look for include banking, dining, hawker centres, clinics and car parking facilities.
I recall one particular tenant who insisted on having several car parking lots.
Unfortunately, due to the limited car parking space for season parking holders, this proved to be difficult.
If you require ample car parking space, then make sure you ask the agent in advance to check with the building management before asking for a viewing.
#4: A column-free space
A column-free space ranks highly as it enables the potential tenant to use the entire space efficiently.
This is from my experience when conducting viewings on the ground.
This is because such space offers them flexibility in how they would like to utilise the space just like drawing from a blank canvas.
You can ask the agent for a copy of the floor plan so you can plan the office planning with your interior designer.
With an increased emphasis on staff’s mental health and wellness, I noticed that corporate tenants now prefer office buildings that offer recreational facilities such as green, open spaces, gyms or swimming pools where their staff can feel relaxed.
As one potential tenant puts it, “when an office feels like home, our staff are more likely to be comfortable and productive at their workplace.
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A regular contributor for PropertyGuru Singapore's AskGuru column, Khalil has his fingers right on the pulse of Singapore's vibrant real estate market.
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