Rendering of IOI Central Boulevard Towers. (Source: IOI)
Morgan Stanley is defying a slowing office market to lease five floors at the upcoming IOI Central Boulevard Towers building in Singapore’s downtown core, Mingtiandi has learned.
The New York investment bank has signed a binding pre-lease agreement with Malaysian builder IOI Properties Group to occupy an estimated 110,000 square feet (10,219 square metres) of floor space in the Marina Bay development, according to people familiar with the matter, confirming news first reported by Bloomberg.
Morgan Stanley is joining Amazon as among the key tenants of IOI Central Boulevard, with the e-commerce titan having last year agreed to lease 11 floors in the development spanning 369,000 square feet. This latest multi-floor deal gives a much-needed boost to Singapore’s leasing market which has slowed in recent months due to a global economic slowdown and ongoing market uncertainties.
“Compared to the past few years in which the market was heavily dominated by the tech sector, we are seeing a more diversified profile of tenants that are supporting demand for premium office space in the market,” said Tridiana Ong, executive director for office services at Colliers. She added that overall leasing demand has been slowing and will take time to catch up with a flurry of projects entering the market.
Southeast Asia HQ
Morgan Stanley reportedly plans to begin occupying the new office as its Southeast Asia headquarters from late next year, with the space set to accommodate roughly 1,000 employees, according to Bloomberg.
IOI Properties executive vice chairman Lee Yeow Seng (IOIGroup.com)
While the rent for the bank’s new space was not disclosed, when Amazon secured its spot a year ago the e-commerce giant was reported to be paying a gross effective rate of around S$10 (now $7.42) per square foot per month.
Average gross effective rents for grade A offices in the Raffles Place and Marina Bay submarket hit S$10.56 per square foot per month in the first quarter, up 0.3 percent from the previous three months and 3.8 percent higher compared to the same period last year, according to Colliers data.
Morgan Stanley’s Singapore team has been based in the Capital Square office block on Church Street – less than 10 minutes’ walk from IOI Central Boulevard – for the past 25 years, according to the Bloomberg account.
In response to inquiries from Mingtiandi an IOI spokesperson said the development “caters to the workforce of the future and is being built to adapt and grow with their needs,” as it gives importance to sustainability, state-of-the-art amenities, accessibility and digital connectivity.
It is understood that JLL brokered Morgan Stanley’s new lease, however, the property consultancy declined to comment on the transaction. Morgan Stanley had not responded to queries from Mingtiandi by the time of publication.
Demand for New Projects
With IOI Central Boulevard slated for completion in the third quarter, at least 45 percent of the 1.26 million square feet of office space in the project is now pre-leased or under advanced negotiations, according to a March market update by JLL.
The development comprises two office blocks, the West Tower spanning 48 storeys with a typical floor plate of about 21,700 to 23,500 square feet, being built beside the East Tower offering 25,400 square feet of space for each floor across nine levels.
The towers are supported by a seven-level podium with 30,000 square feet of space dedicated to restaurants and other retail. The development also features a 120,000-square foot sky park dubbed Central Green, which provides swimming pools, green space, meeting pods and other amenities for tenants.
Located at the junction of Central Boulevard and Raffles Quay, the project has direct underground access to the Downtown MRT station and is within 10 minutes’ walk of Marina Bay, Raffles Place and Shenton Way MRT stations.
In JLL’s March report, Andrew Tangye, the firm’s head of office leasing and advisory in Singapore, said he expected healthy leasing activity for projects nearing completion including IOI Central Boulevard, due to the limited supply of new, high quality space in the downtown area.
Slower Growth in 2023
While new projects continue to appeal to tenants, monthly gross effective rents for premium and grade A offices across Singapore’s central business district inched up by 0.5 percent from the fourth quarter to S$11.46 per square foot in the first quarter, slowing from a 0.6 percent increase over the preceding three months, according to Colliers.
Vacancy also rose to 2.9 percent by the end of March, from 2.3 percent as of 31 December, as occupier demand weakens in the face of more challenging business conditions, the property consultancy said. In the Raffles Place-Marina Bay area, vacancy surged to 4.1 percent in the January to March period from just 1.4 percent in the fourth quarter.
“CBD grade A office rents are expected to see their muted growth continue for 2023, challenged by the ongoing economic uncertainty but supported by flight to quality and the upcoming launch of IOI Boulevard Towers,” said Catherine He, research head for Colliers Singapore.
