COLLIERS INTERNATIONAL 2019 LANDLORD SENTIMENT SURVEY Colliers International 2019 Landlord Sentiment Survey 1
SURVEY OVERVIEW Colliers International s survey of landlords was conducted and completed between April and June 2018. Together, the respondents properties represent over 50% of the Premium and Grade A office stock in Singapore s central business district.
BUILDING MIX Q: What is your building mix? 10% buildings have a hotel component. 15% buildings have a residential component. 75% buildings have a retail and F&B component, other than office. 100% buildings have office component Colliers International 2019 Landlord Sentiment Survey 3
OFFICE VACANCY RATE Q: What is your current vacancy rate? 60% 15% 15% 5% 5% Full Capacity 1-10% Vacancy 11-20% Vacancy 21-30% Vacancy >30% Vacancy > 75% of our respondents buildings have less than 10% vacancy, which is in line with our findings in the Q3 2018 Office Quarterly report. > According to Colliers International Singapore Research, CBD Premium and Grade A office vacancy rate has fallen 2.5ppt since the highest point in Q2 2017 to 5.6%, and should continue declining until the next supply hike in 2021.
RETAIN & ATTRACT Q: How long on average does it take to lease out part floor, full floor and multi-floor? Part floor 25% Less than 3 months Full floor 0% Less than 3 months 70% 3-6 months 55% 3-6 months 0% 9-12 months 45% 9-12 months 5% More than a year 0% More than a year Our key take-aways: 1. Engage the renewal conversation at least 12 months before the end of the lease. 2. Discussions on lease renewals should commence nine months prior to expiry for part-floor space; 12 months ahead for full floor; and 18-24 months for multi-floor space depending on the scale / and market cycle. 3. Monitor developments and trends in growth sectors in order to create a healthy pipeline of targeted occupiers whose requirements will match your offering. Multi-floor 15% Less than 3 months 40% 3-6 months 35% 9-12 months 10% More than a year Establish a two-way communication with your tenants and interact with them regularly to understand both their current needs and future plans. Do not wait for the conventional lease renewal timeframe to contact the tenants, they will start the process well before that. Colliers International 2019 Landlord Sentiment Survey 5
THE IDEAL TENANT MIX Q: What is your ideal target tenant mix? (Top 3) 80% Banking & Finance 60% Technology, Media, Telecom (TMT) *Percentages may not add up to 100% as respondents were allowed to select multiple options 45% Professional Services The Banking and Finance, TMT as well as Professional Services sectors continue to drive demand for office space. Our key take-aways: 1. A diverse tenant mix within a development is important. This can help to reduce the risk of over exposure to any specific sector and mitigate the effects of a downturn or weak external factors on the property portfolio. 2. Banking and finance remains a key driver in the commercial property sector. Increasingly, we note heightened activity in the insurance segment, and more sustainable growth in the legal sector. The oil and gas sector appears to be bottoming, nevertheless, we observe that landlords are still keen to attract tenants from this sector. 3. Landlords should know their target market and be fully aware of what their property can offer to prospective tenants, as well as what the occupiers want, ensuring that the features are relevant to the type of tenants they wish to attract. A favourable tenant-mix will ideally have 70% of the space leased to the top three growth sectors.
ATTRIBUTES TO ATTRACT THE TOP-TIER OCCUPIERS >95% 2.8m Location Efficiency of floor plate at >95% Security Minimum ceiling height of 2.8m Raised flooring Floor-to-ceiling windows End-of-trip facilities Good mix of F&B and retail Health & fitness offering within the premises Accessibility to public transportation Quality of journey BUILDING ATTRIBUTES SOON TO BE THE NORM Floor plate >20,000 sq ft with high efficiency WELL Certification Flexible workspace offering Colliers International 2019 Landlord Sentiment Survey 7
FLEXIBLE WORKPLACE A COMPETITIVE ADVANTAGE? Q: Do you have a flexible workspace provider within your building? 25% 40% 25% 10% Serviced Office and Coworking Space Serviced Office only Coworking Space only Do not have either Q: Do you think that a serviced office or coworking provider adds value to your tenants? 90% 75% 5% 5% 5% 20% Serviced Office Coworking Space Yes No Indifferent Q: Would you consider offering contractual exclusivity to a flexible workspace provider? 20% 80% Yes No
The poll showed that 90% of the respondents have a flexible workspace provider within their building that they believe adds value to their tenants. Our key take-aways: 1. Coworking is catching up rapidly. We see the gap between the number of serviced offices and coworking spaces narrowing. 2. The Colliers-led Flex and Core initiative combines traditional office leases with shorter-term lease tenures in flexible workspaces, ideally within the same building, or nearby. This enables occupiers to be more agile in managing their real estate needs in tandem with changes in headcount, business priorities and project-based initiatives. 3. 80% of the landlords surveyed said they would not consider offering exclusivity to a flexible workspace provider. The majority of buildings in the CBD have already secured flexible workspace in their tenant mix. Due to demand and lack of supply, landlords can be more selective when choosing a flex operator to complement their development offering. Flexible workspace adds value Helps to attract new tenants and incubate future tenants. Enables tenant retention Opportunity to maximise space optimisation within the building Colliers International 2019 Landlord Sentiment Survey 9
RETAINING YOUR TENANTS Q: Do you see tenant retention being or becoming a challenge? Q: What are the key challenges affecting tenant retention? (ranking) 1 st 2 nd 3 rd 75% 25% Yes No Competitor pricing Economic factors New developments Our key take-aways: 1. Competitor pricing was cited as the key challenge in their difficulty in retaining tenants. This, however, is within the landlords control. Bespoke lease strategies should be at the core of transactions. 2. New builds are typically more attractive to occupiers as they offer the key attributes that occupiers aspire to have in a building (such as end-of-trip facilities, enhanced technology, more sustainability features, higher efficiency etc) and a better user experience as identified in page 4. 3. Landlords should understand what drives their occupiers real estate strategy. Office surroundings, quality of building, and supporting amenities are important factors in occupiers talent attraction and retention schemes. Landlords should be proactive and more progressive with varied lease structures whilst ensuring competitive pricing.
BUILDING PERFORMANCE 25% of the respondents deemed their buildings to still have under-utilised space, of which 75% of them identified the under-utilised space in common areas. Q: Do you currently have any under-utilised space in your building? 75% 25% Yes No Q: What type of space? 75% 50% 50% Common areas (roof garden, outside space etc.) Carpark Lobby Colliers International 2019 Landlord Sentiment Survey 11
FROM SOME OF OUR CLIENTS Case Studies Case Study 1 More developments - both new and old - are increasingly activating their lobby areas by incorporating F&B options to inject more vibrancy to the area and offering additional amenities to tenants. The implementation of creative seating layouts also helps to create natural settings where quick discussions and informal meetings can be conducted encouraging interaction amongst tenants. Case Study 2 To maximise revenue, previously under-utilised space in older developments are being converted into leasable areas during asset enhancement and upgrading works. Features such as wellness and fitness areas, electrical charging stations, and communal green areas which are common in new builds are expected to be incorporated. Case Study 3 Take a proactive approach to exploring the conversion of traditionally challenging areas, such as subterranean/basement spaces, as well as incorporating end-oftrip (EOT) facilities including bicycle parking, lockers and shower facilities which will help to strengthen wellness offerings to prospective tenants.
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OCCUPIER SERVICES As your advisor, we drive scenario planning and make recommendations that maximize the value of your property assets. Our Occupier Services team represents the interests of national and multi-national corporate and government tenants and occupiers across Asia Pacific and globally. Our clients rely on us to provide successful outcomes by aligning their real estate needs with their core business plan and local market conditions. We provide you with class-leading, end-toend real estate services, all underpinned by Corporate Solutions expertise, across the full range of industry sectors. Colliers International provides clients with Tenant Representation as specialist expertise within Transaction & Advisory Services of our Occupier Services platform. Our service can be commissioned within a strategic review of your workplace needs, or in collaboration with your in-house leadership as a tactical execution.
WORKPLACE SERVICES WORKPLACE ADVISORY Portfolio Assessment Workplace Strategy Workplace Monitoring Technology Consulting Facility Management LEASING SERVICES CORPORATE REAL ESTATE STRATEGY Change Management LEASE ADMINISTRATION PORTFOLIO OPTIMISATION Tech Management Project Management FLEXIBLE WORKSPACE SERVICES CORPORATE SOLUTIONS Leasing/ Acquisition Tenant Representation Design Management Transaction Management PROJECT SERVICES TRANSACTION & ADVISORY SERVICES
For further information, please contact: Duncan White Executive Director and Head Office Services Singapore +65 6531 8684 Duncan.White@colliers.com Rick Thomas Executive Director and Head Occupier Services Singapore +65 6531 8592 Rick.Thomas@colliers.com Jenny Ling Director Office Services Singapore +65 6531 8509 Jenny.Ling@colliers.com Tricia Song Director and Head Research Singapore +65 6531 8536 Tricia.Song@colliers.com Colliers International Singapore 12 Marina View, #19-02 Asia Square Tower 2, Singapore 018961 Tel: +65 6223 2323 Fax: +65 6222 4901 CEA Licence No. L3004691J www.colliers.com This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s).