SINGAPORE: When IT professional Shrishe Kodancha began working at Changi Business Park more than 15 years ago, buildings were sparse and the area was remote.
"Food was very difficult (to find), and transportation was also very difficult," said the 50-year-old.
Since then, a shopping mall, hotel, transport network and more life has been added to what's been dubbed the "central business district (CBD) of the east".
The sprawling 71ha park, launched in 1997, is home to financial institutions like DBS and Citibank and tech companies such as International Business Machines (IBM), Advanced Micro Devices (AMD) and Huawei.
Office buildings, however, have been clearing out, according to a Bloomberg report which identified IBM as reducing occupancy from 12 floors to two; investment banker UBS Group cutting space by more than half; and the Standard Chartered bank leasing out two floors.
The Jun 6 report also cited data by property consultancy Cushman & Wakefield, which showed that overall vacancy rates across 10 commercial properties had more than doubled in the past three years to nearly 40 per cent.
This is in contrast with Singapore's downtown core, where companies continue to jostle for prime office space even as rents climbed to a 15-year high earlier this year.
Experts told CNA Changi Business Park could revamp itself by wooing a different profile of tenants, including by capitalising on its proximity to the airport and a convention space.
Improving connectivity and the range of amenities offered by the park - which is owned by government statutory board JTC - would also help attract businesses, they added.
A "for rent" sign on IBM's building at Changi Business Park. (Photo: CNA/Koh Wan Ting)
A "for rent" sign on the glass facade of commercial property owned by CapitaLand Ascendas REIT. (Photo: CNA/Koh Wan Ting)
CNA visited Changi Business Park on Monday (Jun 10) and spoke to employees there, who said they've noticed fewer workers around.
"There is a drastically reduced number of people and food stalls," said an AMD engineer who has worked at the park since 2012, and was comparing the situation to pre-COVID-19 pandemic days.
The 35-year-old, who declined to be named, believes that apart from work-from-home trends, many workers were forced to return home due to stricter criteria for their employment passes.
The minimum qualifying salary for Employment Pass applicants was raised in 2022.
An IT professional who wanted to be known only as Mr Vijay said he had friends who left Singapore, and that he also knew of over 20 employees from a particular bank who moved on to other jobs elsewhere.
"Most of them have gone back to their hometown," the 38-year-old said.
CNA approached landlords including ESR-LOGOS REIT and Mapletree Industrial Trust, which manage the ESR BizPark @ Changi and The Signature building at Changi Business Park respectively. Both declined to comment on the occupancy of their properties.
CapitaLand Ascendas REIT (CLAR), which oversees seven properties in the area, including Hansapoint and DBS Asia Hub, said that as of Dec 31, 2023, the occupancy rate of its business space and life sciences portfolio in Singapore was 83.8 per cent.
"This occupancy rate exceeds the industrial average of 78 per cent for business parks, based on JTC’s latest first quarter 2024 quarterly market report," said a spokesperson.
In response to CNA's queries, JTC said it expects vacancy rates of business parks to remain stable if not increase slightly in the coming year.
"While there appears to be higher vacancy rates in older estates, such as Changi Business Park, we do not see this as a reflection of inherent weakness in any specific sector," it added.
Meanwhile, observers CNA spoke to agreed that flexible and hybrid work arrangements would have contributed significantly to vacancies at the business park.
National University of Singapore (NUS) real estate professor Sing Tien Foo said the reduced need for face-to-face interactions would have led to tech and financial firms alike increasingly outsourcing and offshoring some work to places with cheaper labour and rental costs.
Changi Business Park has been directly impacted by such changes in work practices, he said.
Associate Professor Lee Kwan Ok from NUS' business school suggested that companies no longer needed large office spaces.
"As the rent renewal period has come and tenant companies have made decisions accordingly, the rising vacancies at Changi Business Park have become visible," she said, noting that companies have become "choosier" and would keep only the most "essential spaces".
These would likely be located at the CBD instead, especially if firms are concerned about being near similar businesses.
"Other companies also have lower incentives to be (at Changi Business Park) if agglomeration becomes weaker," Assoc Prof Lee added, referring to when businesses of a similar nature cluster together to enjoy network benefits.
The Bloomberg report also went on to describe the park's struggles as dealing "a blow to Singapore's regional hub ambitions".
But experts disagreed, pointing out that rising office vacancies can be observed all around the world.
"Financial companies do prioritise economic stability and securities as well as prestige when considering their location, and Singapore does still stand out," said Assoc Prof Lee.
Prof Sing said new firms, including family offices and other parts of wealth management sectors, would continue to set up operations in Singapore due to its location and political stability.
A coffee shop at ESR BizPark @ Changi used to see more customers during afternoon tea time pre-COVID19, according to one employee who has been working at Changi Business Park since 2012. (Photo: CNA/Koh Wan Ting)
Still, to try and turn things around, developers could convert vacant spaces at Changi Business Park into residential or other commercial spaces to provide more facilities, said Assoc Prof Lee.
Better connectivity to the rest of the city and making the park more "self-contained" would also help, she added.
Experts also suggested that Changi Business Park better pitch its "unique" proximity to Changi Airport and Singapore Expo.
Similar to the upcoming Punggol Digital District's positioning as a smart district, Changi Business Park could target specific industries rather than random tenancy, said Assoc Prof Lee.
Prof Sing said the recent exits there could lead to other firms, including those in logistics and warehouse sectors, to seek office space in the area, to tap on the proximity to the airport.
"Given the land-scarce constraint in Singapore, space is unlikely to be left vacant because of the high opportunity costs," he said, adding that this could be left to market forces, with no special intervention needed by central planners.
JTC told CNA it would continue to work with "other agencies to improve the value, appeal and relevance" of its business parks, to keep them attractive to a "wide range" of occupants.
One company that has taken advantage of Changi Business Park's location is flight simulation centre Wings Academy, which moved into the Haite Building more than a year ago.
Wings signed a three-year lease for its 1,600 sq ft premises.
Founder Fabian Lim noted that the Haite Building houses other businesses related to aviation, and that his company could "conveniently" host foreign visitors arriving at Changi Airport.
He said his business was unaffected by neighbours exiting, though he acknowledged that a lack of food options around was an issue.
Still, the likes of Mr Kodancha appreciates the improvement in connectivity and amenities since he first started working at Changi Business Park around 2008.
"Earlier, it was very difficult - there was only one train (station), that's it, Expo. Now we have the Downtown Line and buses are also there ... plus private charter buses," said the IT professional. "Now, it is very easy ... I'm used to this area."
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"Food was very difficult (to find), and transportation was also very difficult," said the 50-year-old.
Since then, a shopping mall, hotel, transport network and more life has been added to what's been dubbed the "central business district (CBD) of the east".
The sprawling 71ha park, launched in 1997, is home to financial institutions like DBS and Citibank and tech companies such as International Business Machines (IBM), Advanced Micro Devices (AMD) and Huawei.
Office buildings, however, have been clearing out, according to a Bloomberg report which identified IBM as reducing occupancy from 12 floors to two; investment banker UBS Group cutting space by more than half; and the Standard Chartered bank leasing out two floors.
The Jun 6 report also cited data by property consultancy Cushman & Wakefield, which showed that overall vacancy rates across 10 commercial properties had more than doubled in the past three years to nearly 40 per cent.
This is in contrast with Singapore's downtown core, where companies continue to jostle for prime office space even as rents climbed to a 15-year high earlier this year.
Experts told CNA Changi Business Park could revamp itself by wooing a different profile of tenants, including by capitalising on its proximity to the airport and a convention space.
Improving connectivity and the range of amenities offered by the park - which is owned by government statutory board JTC - would also help attract businesses, they added.
A "for rent" sign on IBM's building at Changi Business Park. (Photo: CNA/Koh Wan Ting)
A "for rent" sign on the glass facade of commercial property owned by CapitaLand Ascendas REIT. (Photo: CNA/Koh Wan Ting)
"CHOOSIER" COMPANIES
CNA visited Changi Business Park on Monday (Jun 10) and spoke to employees there, who said they've noticed fewer workers around.
"There is a drastically reduced number of people and food stalls," said an AMD engineer who has worked at the park since 2012, and was comparing the situation to pre-COVID-19 pandemic days.
The 35-year-old, who declined to be named, believes that apart from work-from-home trends, many workers were forced to return home due to stricter criteria for their employment passes.
The minimum qualifying salary for Employment Pass applicants was raised in 2022.
An IT professional who wanted to be known only as Mr Vijay said he had friends who left Singapore, and that he also knew of over 20 employees from a particular bank who moved on to other jobs elsewhere.
"Most of them have gone back to their hometown," the 38-year-old said.
CNA approached landlords including ESR-LOGOS REIT and Mapletree Industrial Trust, which manage the ESR BizPark @ Changi and The Signature building at Changi Business Park respectively. Both declined to comment on the occupancy of their properties.
CapitaLand Ascendas REIT (CLAR), which oversees seven properties in the area, including Hansapoint and DBS Asia Hub, said that as of Dec 31, 2023, the occupancy rate of its business space and life sciences portfolio in Singapore was 83.8 per cent.
"This occupancy rate exceeds the industrial average of 78 per cent for business parks, based on JTC’s latest first quarter 2024 quarterly market report," said a spokesperson.
In response to CNA's queries, JTC said it expects vacancy rates of business parks to remain stable if not increase slightly in the coming year.
"While there appears to be higher vacancy rates in older estates, such as Changi Business Park, we do not see this as a reflection of inherent weakness in any specific sector," it added.
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Meanwhile, observers CNA spoke to agreed that flexible and hybrid work arrangements would have contributed significantly to vacancies at the business park.
National University of Singapore (NUS) real estate professor Sing Tien Foo said the reduced need for face-to-face interactions would have led to tech and financial firms alike increasingly outsourcing and offshoring some work to places with cheaper labour and rental costs.
Changi Business Park has been directly impacted by such changes in work practices, he said.
Associate Professor Lee Kwan Ok from NUS' business school suggested that companies no longer needed large office spaces.
"As the rent renewal period has come and tenant companies have made decisions accordingly, the rising vacancies at Changi Business Park have become visible," she said, noting that companies have become "choosier" and would keep only the most "essential spaces".
These would likely be located at the CBD instead, especially if firms are concerned about being near similar businesses.
"Other companies also have lower incentives to be (at Changi Business Park) if agglomeration becomes weaker," Assoc Prof Lee added, referring to when businesses of a similar nature cluster together to enjoy network benefits.
The Bloomberg report also went on to describe the park's struggles as dealing "a blow to Singapore's regional hub ambitions".
But experts disagreed, pointing out that rising office vacancies can be observed all around the world.
"Financial companies do prioritise economic stability and securities as well as prestige when considering their location, and Singapore does still stand out," said Assoc Prof Lee.
Prof Sing said new firms, including family offices and other parts of wealth management sectors, would continue to set up operations in Singapore due to its location and political stability.
A coffee shop at ESR BizPark @ Changi used to see more customers during afternoon tea time pre-COVID19, according to one employee who has been working at Changi Business Park since 2012. (Photo: CNA/Koh Wan Ting)
NOT VACANT FOR LONG?
Still, to try and turn things around, developers could convert vacant spaces at Changi Business Park into residential or other commercial spaces to provide more facilities, said Assoc Prof Lee.
Better connectivity to the rest of the city and making the park more "self-contained" would also help, she added.
Experts also suggested that Changi Business Park better pitch its "unique" proximity to Changi Airport and Singapore Expo.
Similar to the upcoming Punggol Digital District's positioning as a smart district, Changi Business Park could target specific industries rather than random tenancy, said Assoc Prof Lee.
Prof Sing said the recent exits there could lead to other firms, including those in logistics and warehouse sectors, to seek office space in the area, to tap on the proximity to the airport.
"Given the land-scarce constraint in Singapore, space is unlikely to be left vacant because of the high opportunity costs," he said, adding that this could be left to market forces, with no special intervention needed by central planners.
JTC told CNA it would continue to work with "other agencies to improve the value, appeal and relevance" of its business parks, to keep them attractive to a "wide range" of occupants.
One company that has taken advantage of Changi Business Park's location is flight simulation centre Wings Academy, which moved into the Haite Building more than a year ago.
Wings signed a three-year lease for its 1,600 sq ft premises.
Founder Fabian Lim noted that the Haite Building houses other businesses related to aviation, and that his company could "conveniently" host foreign visitors arriving at Changi Airport.
He said his business was unaffected by neighbours exiting, though he acknowledged that a lack of food options around was an issue.
Still, the likes of Mr Kodancha appreciates the improvement in connectivity and amenities since he first started working at Changi Business Park around 2008.
"Earlier, it was very difficult - there was only one train (station), that's it, Expo. Now we have the Downtown Line and buses are also there ... plus private charter buses," said the IT professional. "Now, it is very easy ... I'm used to this area."
Related:
Continue reading...