Image Credit : Mapletree
Singapore has been long considered as an established financial and business city, and a preferred hub for many foreign businesses keen on establishing their Asia Pacific HQ in the region, especially in the rise of the massive South East Asia market. In order to meet various needs of industries and needs, the government has been working on major business and industrial infrastructure and developments islandwide, in the CBD city centre, city fringe and the suburban areas.
The CBD city centre has always been well regarded as the most suitable location for most MNCs as well as many other businesses due to its excellent location, infrastructure, transport connectivity and of course availability of good grade office space. For many MNCs ,especially those in banking, financial services ,legal and energy sectors, being in a Grade A office building and address is essential.
However the downsides of having a presence in downtown CBD, are having to pay a sky high rental , issues of over crowding, paying higher for items like food, parking etc.
Due to the above overcrowding issues and land scarcity in city centre, the Singapore government has been trying to build more commercial nodes outside the city centre and satellite townships by putting land parcels for sale or lease in sub urban centres and districts particularly for mixed, office or business park developments.
Some of the more popular sub-urban locations are Paya Lebar Square, Metropolis ( One of the first Grade A building outside of CBD) , Mapletree Business City etc.
As a result of this decentralisation exercise, a large number of business parks in many different sub-urban locations have been built and established over the past two decades. The government also ensure that more land will continue to be set aside for the various businesses in different sectors for their operational and expansion needs.
This approach will ensure Singapore remains to be relevant to the ever changing business dynamics of local and foreign enterprises by maintaining its land bank to be appropriately zoned to fit in various industrial needs and requirements. This move so far has been achieving a substantial level of success in attracting many big names to the city state- i.e Dyson is setting up their first electric car plant outside UK here in Singapore , Glaxo Smith Kline opening their new $130M facility in Jurong.
Together with the government open and friendly policy to foreign enterprises and startups, it has shown its effectiveness in maintaining the country’s vibrancy and commercial viability in attracting both small and large businesses and even well funded unicorns in setting up shop in Singapore.
So just how successful are Business Parks and are how they relevant in the present business landscape?
First and foremost what is a Business Park, and what kind of businesses are allowed and deemed suitable for which business park?
“According to JTC Corporation, business parks refer to areas for non-pollutive industries and businesses that engage in high-technology, research and development (R&D), high value-added and knowledge-intensive activities. Hence, businesses suited for business parks include a wide range of light and clean uses such as R&D, data centre, information technology, telecommunications, electronics, healthcare devices, product design, development and testing, technical support helpdesk, service centres and back-end operations of financial institutions,”
Here’s a look at some of the most popular business parks in Singapore.
Master-planned & developed by JTC , One-north is a 200-ha located on western part of Singapore, with a 10 minutes’ drive to Singapore’s CBD and well served by the one-north and Buona Vista MRT Stations on Circle and East-West line respectively.
It was constructed in close proximity to the tertiary institutions such as National University of Singapore , Singapore Polytechnic and medical institutions like the National University Hospital, so as to create a vibrant hub that encourage learning and cultivate industries such as bioscience, infocomm technology , IT ,software and other leading technology solutions. The creation of such a hub has brought about many multinational corporations, small and medium enterprises and start-ups here, resulting a world-class home for many high tech innovative global fast growth companies.
Some of the most popular landmarks in One North will be Fusionopolis, Biopolis , Solaris ,The Rochester etc. Grab and Razer has also confirmed building their HQ buildings in One North and expected to be opening in 2020.
Mapletree Business City
Located at Singapore’s CBD fringe, with a less than 10 mins drive from CBD, Mapletree Business City (MBC) is an award-winning development that provides a holistic and enriching work environment for all users. It was one of the first that feature a holistic office environment that integrates, retail, leisure, dining amenities all into one. As part of the 13.5-ha Alexandra Precinct, MBC itself is housed in a 2.8-hectare garden of landscaped lush greenery, it is also connected to Alexandra Retail Centre, PSA Building and Labrador Park MRT via sheltered access.
One major move to MBC was Google in 2016 from Asia Square in CBD. Google has also just confirmed an additional 344,100 sft at adjacent Alexandra Technopark.
Changi Business Park
Strategically located in a beautifully-landscaped environment that is supported by 2 MRT lines ( East West & Downtown ) and just a train station away from Changi Airport, Changi Business Park (CBP), which is on a 71 hectare of land, comprises of multiple high tech buildings that house businesses from industries such data and software enterprises, R&D, Engineering design ,call centre and other knowledge-intensive enterprises. It’s also a popular location for back room and IT support operations of many large banks and financial institutions.
Some of the world’s leading companies at CBP include Honeywell, IBM,Xilinx and leading financial institutions such as DBS Bank, Citibank, Credit Suisse and Standard Chartered Bank etc.
Advantages of operating in a business park
1. Savings in Rent
The number one major advantage will be the savings in rent , as compared to leasing an office space in a Grade A office in CBD.
Let’s look at a comparison below
Type of property Median rentals $ psf pm (1Q2019 – 2Q 2019)
Business Park (City Fringe ) $5.20 psf
Business Park ( Outside Central ) $5.23 psf
Office space (Grade ‘A’) ( Central ) $10.00 psf
Office space- ( Grade B ) (Central) $7.60 psf
By just looking at the above, businesses can expect a more than 30%- 40% in rental savings if they can relocate and set up office in a Business park. However the nature of business will be subjected to approval of URA , as Business Parks are classified under either B1 or B2 zoning. All business located in these business parks must be in the approved and qualified trade and fulfil the 60/40% space allocation for core and ancillary business activities.
2. Improved Productivity
With companies moving to business parks nearer to home, workers can travel to their workplace within a faster time and vice versa. Besides leading to improved productivity , it also leads a better work-life balance which has been heavily promoted by both enterprises and government.
3. Better lifestyle amenities in Business Parks.
Gone were the days, that you are expected to work in a dull industrial estate in an isolated location, with only a few canteens available. More developers are building lifestyle amenities within business parks to better cater to modern lifestyle of workers such as a wider range of F&B, fitness centres, swimming pool, child care facilities and even bars.
4. Better building specifications
One reason why many MNCs are drawn towards Grade A office buildings is the availability of large floor plates. In order to better match the demand for corporates with such a requirement, more properties in business parks are being built with large floor plates , raised flooring, as well as full floor to ceiling windows.
5. More attractive incentives provided by Landlords.
More Business Parks landlords are providing much more incentives to entice prospects and tenants to set up their office in their business parks. Incentives such as giving rent free period for up to 6 months, giving preferential rates for the first few years. fitting out allowance etc are some of the common incentives that landlords are known for giving.
6. Lower costs working outside of CBD.
It’s a well known fact , by working outside of CBD, it will help every individual to save costs on dining, car-parking, laundry and many other expenses. One can expect to save up to 20% compared to working inside CBD. For example, a season parking in Raffles Place will costs around $400 on average a month whereas a season parking lot in a sub-urban business park will cost less than $200 a month.
What we think of business park space.
With prime office rents expected to continue rising next few years, an office space in a business park is increasingly seen as an attractive alternative.
We have already seen many office space occupiers relocating from CBD to sub-urban business parks and office buildings in the past few years. As prime office rent will continue to be invariably high, this trend will probably stay this way for quite a while. Office space occupiers comprising of startup companies or other office tenants should strategically utilise any opportunity to relocate to take advantage of lower rents, and similarly information technology (IT) firms should also consider relocating and expanding their operations in business park space.
Unsure of which Business park space is suitable for your business. Speak to us today for a 100% non obligatory discussion.