CBD-style office space coming up in suburbs

Aug 16, 2008
CBD-style office space coming up in suburbs
Soilbuild to provide alternative to increasingly pricey downtown
space
By Bonnie Oeni

DEVELOPER Soilbuild Group Holdings is not overly fussed about current
weak residential property market sentiment.

While residential property remains Soilbuild's core business, the
firm is seizing the moment to beef up its business space development -
as downtown office rents and other commercial rents are still
relatively high.

Soilbuild says it is creating Central Business District-style
commercial space in the suburbs as an alternative to the increasingly
pricey CBD.

The company has been developing properties custom-built for business
use since 2005, but it has recently moved to improve its business
space portfolio significantly.

Soilbuild let a total of 321,500 sq ft of commercial space last year,
but this is slated to increase to 3,740,000 sq ft in the near future.
By comparison, only 232,500 sq ft of new residential space will be
launched in the second half.

It has acquired four new projects related to leasing and selling
space to companies, to be completed by 2010. This is compared to only
three new projects slated for future residential development.

The firm's executive director Low Soon Sim said: 'Sentiment in the
residential market is weak. But on the business space side, there's
still room for growth.

'If you look at the investments last year, which were $16 billion or
$17 billion in commitments, the Economic Development Board thinks
we're going to continue attracting them here. (Industrial landlord)
JTC's take-up rates have still been fairly firm in the first half.'

Soilbuild's new commercial projects include Solaris in Ayer Rajah
Avenue, a business park for multinational companies in infocomms,
science and engineering research and development industries.

It is also developing Tanjong Kling in the Jurong Industrial Estate,
which supports the petrochemical and marine engineering industries,
as well as SME- related business areas, Woodlands Industrial Park and
Goodvine at Changi.

'Changi Business Park gives us average rentals of about $3.70 per sq
ft,' Mr Low said.

'We're essentially taking industrial land and recreating a CBD
environment out of it. Even at $4, $5 psf, compared to Raffles Place,
the value for most of these MNCs is still very attractive, especially
those with fixed investments and which want to stay three to five
years, not just six months to a year.'

Firms such as Citibank are already shifting their back-end offices to
suburban office areas, to cut costs.