As the global banking industry continues to restructure, Singapore’s CBD is starting to adapt and change to accommodate a new era of office workers.
Singapore is seeing a significant shift in the tenant mix for office space in the central business district. With the banking sector continuing to go through restructuring and layoffs, there’s been a much more diverse range of companies moving in to take their place.
Sometimes that’s literally true – banks have been downsizing their offices physically as fast as they have been reducing their headcount. Developers and landlords have also learned a valuable lesson in the financial crisis and are also looking to make sure they have a more balanced range of industries in new buildings.
“Ten years ago all anyone wanted was financial houses because they saw them as a growing industry that had the ability to pay,” Chris Archibold, the Head of Markets for JLL in Singapore, says. “Now any intelligent asset manager wants a bit more of a mix.”
In the case of Singapore most of the new faces come in three industry groups: e-commerce; consumer products and insurance. Google, for instance, has expanded six times and now has its headquarters for the Asia Pacific region spanning four floors in Asia Square.
That building, praised for its environmental features, has at the same time drawn a cluster of re-insurers such as Swiss Re and SCOR, as well as traditional financial companies, with its location in Marina Bay, at the heart of Singapore’s financial district.
The mix can make for odd bedfellows. Google installed a 400-person canteen that feeds “Singagooglers” three times a day for free. Asia Square has 400 bicycle racks and showers so tech types can bike to work.
“You have this very bizarre dichotomy of Citibank bankers in their shiny shoes
and guys in flip flops and shorts in the same elevator,” Hugh Andrew, the head of asset management for the Asia Pacific at BlackRock, says. BlackRock owns the building via one of its funds.
Booking.com and e-Bay have both been opening new offices or expanding existing ones. PayPal has even placed its international headquarters in the Lion City, Facebook is looking to double its space and LinkedIn is taking up 50,000 square feet vacated by Barclays.
Singapore’s pleasant lifestyle has made it a draw for companies looking to attract top talent. For instance, the cosmetics company L’Oreal moved many of its Asian operations from Shanghai to Singapore, one motive being the need to retain senior staff who demand better schooling and standards of living for their families.
General Motors moved its Asian headquarters from Shanghai, taking over 30,000 square feet in Singapore from the Bank of America Merrill Lynch. The insurer Aon is also building its Asia Pacific hub in Singapore and toy maker, Lego, is in the Marina Bay Financial Centre.
One of the main drivers of the growth in industries such as consumer products and e-commerce is Asia’s rising affluence, particularly in emerging economies, according to Valerie Wong, the general manager of leasing at the Singapore-based developer GuocoLand. Guoco Tower, now under development in the company’s Tanjong Pagar Centre, has sparked interest from a similar mix of new media and insurance firms as well as companies in high finance.
That tower, two years away from completion, is part of a broader integrated development called Tanjong Pagar Centre which, when completed, will be Singapore’s tallest building comprising business hotel, luxury apartments, F&B and retail and a unique urban park. Tanjong Pagar, an established part of Singapore’s CBD is currently undergoing a major government backed urban regeneration which Guoco Tower at Tanjong Pagar Centre will be the anchor development for the area. In addition to this exciting new development there are also new office buildings, luxury residential, retail and F&B being added to the area.
The effects of the new tenant mix are clearest with office space. But they spill over to benefit other sorts of real estate as well.
“Historically retailers have been concerned about the catchment for retail being purely from office occupiers and hence a 5 day trading focus. With developments such as Guoco Tower and Asia Square that incorporate mixed uses there is an active population on site to accommodate 7 day trade,” Andrew Tangye, director of markets for Singapore at JLL, says. “Developments like these will be able to attract a diverse mix of tenants and will have a positive impact on the ever evolving retail landscape in the CBD”
Developers also have to think about designing flexible floor plates to suit different kinds of companies, as well as to include lifestyle features such as gyms to cater to the new clients. Green features are also key, with developers incorporating features such as harvesting rainwater from the building, regenerating power from the lifts, and finding innovative ways to save energy on heating and cooling.
“For modern companies with young employees, they will want to know answers to questions such as ‘will I be working in a sustainable environment?’” Andrew at BlackRock says. “Twenty years ago, people were just wondering how big their office was going to be, and if it came with a parking space?”
He notes that Asia Square has photovoltaic cells on the roof and a lighting system in the common areas that dims them when no one is around. “They come back on when tenants arrive. It is basic technology but rarely used.”
Back in 2005 Singapore’s government launched a major push to develop the country as a prominent global financial centre. However over the last three years, the global finance houses that dominated some 60 percent of downtown office space in Singapore have given up 500,000 square feet in space. Though they still occupy some 11 million square feet, the reduction has been relatively steady and has yet to finish. Encouragingly the majority of this space has been absorbed by other industry groups.