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Beyond The Core: Singapore’s Office Decentralisation

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A look at where Singapore’s moves to shift office space outside the Central Business District (CBD) have taken us, and the future of the CBD itself.

The Metropolis at one-north is one of several “decentralised” office spaces in Singapore that have sprung up over the years, as the government continues its efforts to build employment areas outside the CBD – in line with a decades-long policy to put more jobs outside the city centre. Plans are already in the works for three major economic gateways in Singapore’s east, west and north, including a second CBD in Jurong Lake District.

Taking things a step further, the government just this week announced plans to encourage more non-office use into the CBD, which could change the make-up of the country’s traditional business hub and lead more office tenants to move outwards.

Offices outside the CBD see good take-up rates today, though industry players say a cocktail of considerations – ranging from cost to occupier profile – weigh on corporates’ minds.

For well-established non-CBD markets, Grade A office vacancy rates were tight as at Q4 2018: under 1.5 per cent for Tampines, Jurong, one-north and Novena/Newton, according to Cushman & Wakefield data. Offices there have attracted big names too. In 2015, Daimler signed on to Westgate Tower in Jurong from Centennial Tower, reportedly saving 30 per cent in rental in the process.


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Government entities have also moved out of town, with the Agri-Food and Veterinary Authority (AVA) and the Building and Construction Authority (BCA) moving to JEM in Jurong, and the CPF Board moving its corporate functions to Novena from the CPF Building in Robinson Road.

Those moves were likely driven by both push and pull considerations: certain businesses (or parts of the group) do not require a prime CBD location for their local or regional operations, or they would benefit from proximity to the industrial activities in the west region. “Thus the continued expansion of employment areas outside the CBD will increase the offering of alternative options for business space, catering to a wider range of businesses,” says a URA spokesperson.

The CBD here remains as the core financial and business hub, a URA spokesperson tells BT. To be sure, most experts think some sectors, like banking and finance, will always crave the prestige of the CBD address.

With new economic gateways to have their own specialisations like food in parts of the north and aviation in parts of the east, Knight Frank’s senior director and head of research Lee Nai Jia notes the benefits will come in labour pooling and sharing of infrastructure.

There are also benefits of clustering multiple industries together in the same space, sparking collaboration organically, adds Dr Lee.

What of the CBD?

Meanwhile, the government has plans for a larger live-in population in the Central Area, with homes to come in Downtown, Marina South and Rochor, going by the recently released Draft Master Plan 2019.

There is potential for over 20,000 more homes to offer a greater variety of housing choices in the city, a URA spokesperson says. That’s on top of the potential residential and hotel uses that could come from the CBD Incentive Scheme.

CBRE’s Mr Sim says moves like these “spread out land use to be more efficient; if not land use is only from 8am to 8pm”. For older offices in the traditional CBD, the new incentive scheme could mean a wave of renewal.

Yet these best-laid plans might be unpicked by deep-seated preferences and unexpected market behaviour.

Executive director for ZACD Group Nicholas Mak says that if the government wants to attract more “average Singaporeans” to live in the CBD, the homes have to be affordable, but selling land to the highest bidders will only result in pricey condos.

“It is more economical to live in the suburbs and commute to work daily. Furthermore, if you work five days a week in the CBD, do you still want to spend your weekends in the CBD? Or would you rather spend your leisure time away from your place of work?”

On the other hand, Dr Lee of Knight Frank notes: “Interestingly, if there are plans for more living-in and to make the CBD more vibrant, then it makes centralisation more attractive.”

Source: Business Times dated 30 Mar 2019

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