Amazon Inks Deal for 11 Floors at IOI Central Boulevard in Singapore

Amazon has agreed to occupy around 369,000 square feet (34,281 square metres) of office space at the IOI Central Boulevard Towers skyscraper in Singapore’s downtown core, according to a broker active in the market.

The American e-commerce giant has reached a “binding commitment” with Malaysian listed developer IOI Properties Group to be one of the key tenants at the Marina Bay office building when it opens in the third quarter of 2023, said David McKellar, co-head of office services and occupier at CBRE. The information from McKellar, who was not involved in the deal, confirms an earlier report in the Business Times.

Amazon has agreed to occupy two 70,000 square foot podium levels in IOI Central Boulevard as well as nine office floors in the project’s 16-floor East Tower which average around 25,480 square feet each, according to the BT account.

“Singapore continues to be a thriving hub for tech and financial services, supported by a strong talent pool, world class digital infrastructure and a transparent tax regime,” said Tricia Song, research head for Southeast Asia at CBRE. “The recent tech market volatility may have raised concerns of demand cooling for office space in Singapore, but we expect well established and financially-sound tech companies to continue to grow their footprint in Singapore, as their long term prospects remain healthy.”

Early Bird Discount

Amazon is estimated to be paying gross effective rents of around S$10 ($7.13) per square foot per month at IOI Central Boulevard, according to the BT account, which would represent a discount from the developer’s target rates of S$12 to S$14 per square foot.

“Typically, a first and early commitment to a new CBD development can attract a 15-30 percent discount in comparison to late stage commitments,” McKellar said, adding that the lease terms secured by similar sized occupiers over the past decade usually range from 6 to 10 years.

Based on independent calculations, the reported rate translates to Jeff Bezos’ firm paying S$3.69 million ($2.63 million) in monthly rent for its new location. The rate also falls at least 13 percent below typical tariffs for grade A properties in Marina Bay, where rents averaged S$11.50 to S$13.00 per square foot in the second quarter, based on data from CBRE.

Amazon is taking up 29 percent of the 1.26 million square feet of grade A office space under construction in IOI Central Boulevard. In addition to the East Tower, the project’s West Tower will reach 48 floors, with the seven-level podium incorporating 30,000 square feet of space for restaurants and other retail.

Located at the junction of Central Boulevard and Raffles Quay, the property 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.

Amazon and JLL, who is said to have brokered the lease declined to comment on the transaction and IOI had not replied to inquiries from Mingtiandi at the time of publication.

Amazon Loves Downtown

Amazon’s new lease is just steps away from a ​​100,000 square foot office which it opened in tower one of Asia Square last October, giving the tech giant an opportunity to consolidate its team into adjacent buildings.

Aside from the three floors it occupies at Asia Square, the company also leases 45,000 square feet of space at One George Street, another 80,000 square feet at Capital Square, and some WeWork space at Manulife Tower – all in Raffles Place. The e-commerce player is expected to consolidate some of those team members into its new Marina Bay location.

Malaysia’s IOI is also a fan of the Marina Bay area with two major projects currently in progress in the neighbourhood.

IOI Central Boulevard is scheduled to obtain its temporary occupation permit by the third quarter of next year, after the developer won the 1.1 hectare (2.7 acre) site with a S$2.6 billion bid via a public tender in 2016.

The Malaysian builder followed up in September last year by picking up a 0.78 hectare Marina View “white site” five minutes’ walk from IOI Central Boulevard at Shenton Lane and Union Street. IOI’s winning bid of S$1.51 billion bid in a government land sale entitles it to develop up to 1.1 million square feet of floor area primarily for residential and hotel use on that site, with a limited portion available for office or retail development.

Marina Bay Vacancy Falls To 3%

CBRE’s McKellar said Marina Bay continues to attract “healthy demand” for office space from the tech sector and multinational asset management firms, saying that other transactions are already in the “final stage of negotiations,” without disclosing further details.

Amazon is one of a growing set of regional and global tech firms gobbling up office space in Singapore’s downtown core.

ByteDance is expected to move into CapitaLand’s Capital Tower in the Tanjong Pagar area, where the parent company of TikTok will take up around 80,000 square feet from a seven floor space which was previously occupied by banking giant JP Morgan.

Average office rents in Marina Bay rose by 2.8 percent during the second quarter, compared to the preceding three months as “landlords have been emboldened to raise their rental expectations” amid tight vacancy rates, said CBRE’s Song.

She added that at 3.1 percent, vacancy in Marina Bay remained low compared to the 6.4 percent level across Singapore’s central business district, with leasing enquiries potentially on the upswing as the city’s office market benefits from looser travel restrictions.

“While hybrid working could keep the overall office demand footprint below pre-pandemic levels, rental growth should continue to remain positive in the short to medium term, driven by expansionary demand from technology firms, private wealth and asset managers, and flexible workspace operators amidst very limited new supply,” she added.