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A billion-dollar push by the city-state to create an alternative business hub near Changi Airport was once a big draw for banks and tech giants. Now it’s rapidly emptying out.
Singapore’s commercial real estate market has been a standout amid a global downturn, with one major exception.
Just nine miles from the gleaming skyscrapers that crowd the country’s Central Business District sits a 71-hectare (175-acre), billion-dollar example of the city-state’s push to create alternative business hubs. Changi Business Park, dubbed the “CBD of the East” was a big draw for tech giants including International Business Machines Corp. and Advanced Micro Devices Inc. Global banks from JPMorgan Chase & Co. to Citigroup Inc. have also situated their back-end staff there.
The business park is now rapidly emptying out, dealing a blow to the Singapore government’s meticulous urban planning and efforts to get foreign businesses to expand their regional operations in the Southeast Asian island nation. Overall vacancy rates across 10 commercial properties there tracked by property consultancy Cushman & Wakefield have more than doubled in the past three years to nearly 40%.
The development’s woes show how global tech and finance layoffs, together with the push to work from home since the pandemic, are even overpowering a project with powerful government support in one of the world’s most desirable financial hubs. Changi’s struggles contrast with Singapore’s packed downtown, where prime office rents soared to a 15-year high earlier this year and buildings are almost full.
IBM, which occupied two namesake buildings with a total of 12 floors at Changi, has reduced its presence to two floors, according to people familiar with the situation, who asked not to be identified discussing private matters. UBS Group AG has cut the more than 110,000 square feet (10,220 square meters) of space it occupied by more than half. Standard Chartered Plc, which owns two buildings in the park, has been seeking to lease out two floors with at least 58,000 square feet of office space, according to a property listing.
During a recent visit to Changi, several buildings had “For Rent” signs plastered outside their modern glass facades, including the space IBM formerly occupied, which is owned by government agency JTC Corp. Hansapoint, a seven-story development with landscaped gardens and a gym, was only 36.5% occupied at the end of 2023 following UBS’s downsizing. It was close to full previously. The Swiss bank declined to comment.
Hansapoint is owned by CapitaLand Ascendas REIT, one of Singapore’s largest commercial landlords. The overall occupancy of the real estate investment trust's more than 2.3 million square feet of lettable space in the park has dropped to about 76% at end-2023, from nearly 94% four years earlier. Some of its under-performing business park units in Changi and elsewhere are being offered at a "3-for-2" rate - meaning that tenants can get one year's rent free if they sign a new three-year lease, according to people familiar with the matter and a promotional campaign online.
A spokesperson for the REIT said it is in discussions with prospects for Changi Business Park, and that it employs a wide range of incentives to engage with potential clients and existing tenants. The firm’s overall business space and life sciences portfolio occupancy exceeds the industrial average in the country, the spokesperson said.
Singapore remains a critical global hub for Standard Chartered, where over 80% of its staff here have adopted flexible work arrangements, a spokesman for the British lender said. The bank retains a significant presence at Changi Business Park and the downtown Marina Bay Financial Centre, he said. IBM, which also retains three floors at MBFC, said it remains committed to its local operations, and its “optimization” of space at Changi in recent years has been shaped in part by its hybrid working model and the spinoff of its managed infrastructure services business.
More at https://urlr.me/BGzvXU
