What’s driving robust office demand in Singapore?

Despite firms’ plans to reduce office footprint, there will still be a net increase in office demand.

According to a recent report by Knight Frank, despite the reporting of business contractions and/or employee layoffs around the world, many international corporations continued to relocate functions to Singapore alongside local start-ups. 

Data from the Accounting and Corporate Regulatory Authority (ACRA) reveal that the number of entities registered in Singapore grew from 570,992 to 579,221 in the first five months of 2023. Knight Frank says this increase of 8,229 is higher than the 4,649 new entities registered over the same period in the previous year. It was also reported that 203 foreign companies established new set ups in Singapore since 2021. 

Here’s more from Knight Frank:

While the rising costs of operations and escalating rents might lead some businesses to delay or to cancel expansion plans, Singapore remains a destination of choice for many foreign multinational corporations (MNCs) and family offices (FOs), with the flight-to-safety dynamic a sustained demand driver as firms prioritise business continuity amid the ongoing geopolitical and economic tensions.

Although a survey conducted by Knight Frank and Cresa cited that half the international respondents that had around 50,000 employees, had plans to reduce global office footprint by 10% to 20% in the next few years, net increases are still being observed in Singapore. 

An example of expansion is Morgan Stanley, which was reported to be moving to IOI Central Boulevard Towers, with business expansion key to their operational strategy. Morgan Stanley is expected to occupy about 100,000 sf of space when the development completes in late 2023.

In the same survey, again nearly half of the 350 respondents planned to move their corporate headquarters within the next few years. Such relocations could translate to net expansion spaces, with occupiers seeking the right workplaces that enhance productivity, and at the same time pursue corporate sustainability goals in the long term. One example is the recent announcement of Publicis Groupe moving to Guoco Midtown, occupying 55,000 sf of space. 

The completed office development offers a wide array of lifestyle trends including end-of-commute facilities. With landlords being more conscious of the Environment, Social and Governance (ESG) framework and becoming advocates themselves, new builds, redevelopment or asset enhancement initiatives (AEIs) are incorporating sustainability features so that buildings stay competitive and attract blue-chip international tenants.