Asia Square Tower 1 has Citi as its anchor tenant
One month after Singapore authorities said they would begin requiring employers to facilitate employee requests for flexible work, global banking giant Citigroup is reported to be considering shrinking its footprint in one of the city-state’s priciest commercial hubs.
Citi is exploring opportunities to hand back one of the six floors it occupies in Tower One of the Asia Square office complex in Marina Bay, according to a Bloomberg report late last week. A representative of the New York-based bank declined to confirm the news while explaining that the company is now allowing the majority of its team members to enjoy work from home options.
“The way of working has changed in recent years and most of our staff are on a hybrid work model,” a spokesperson at Citi Singapore told Mingtiandi on Friday. “We periodically look at new ways to optimise our work spaces to encourage innovation and collaboration and meet our operational needs.”
The potential contraction for Citi Group comes four years after the company reduced its footprint in Asia Square from nine floors to six as it shifted some team members to a less central location near Changi Airport in eastern Singapore.
Shrinking Marina Bay Office
Citi’s reported downsizing comes after the company announced a global reorganisation last September which involves laying off about 20,000 staff worldwide.
Citi CEO Jane Fraser
The Qatar Investment Authority (QIA) purchased Tower One in Asia Square in 2016 for S$3.4 billion (then $2.45 billion), with gross effective rents for Grade A office space in the Marina Bay area rising 0.8 percent year-on-year to S$12.19 per square foot per month in the first quarter, according to Cushman & Wakefield.
That rate ranks the areas as the most expensive of Singapore’s major commercial hubs, ahead of the Raffles Place and Shenton Way area, with vacancy in Marina Bay also the lowest in the city-state during the first quarter at 1.9 percent.
After Citi, which is the anchor tenant in Tower One, gave back its office floors four years ago part of that space was taken over by tech giant Amazon.
Singapore Follows Hybrid Movement
While high interest rates and a slowing regional economy have persuaded many businesses to hold off on expansion plans, Singapore’s new policy on hybrid work could further stunt demand for office space, according to Catherine He, research head at Colliers.
“The guidelines on flexible work arrangements will become compulsory for employers to follow in 2024. As such, more firms may right-size according to their work arrangements and corresponding space requirements,” He said. She added that, “Office demand is set to remain muted in the near term.”
Singapore’s guidelines announced last month are set to take effect from 1 December and will “…require employers to properly consider FWA (flexible work arrangement) requests based on business grounds, and employees to request and use FWAs responsibly.”
Other multinationals are also altering their office thinking in Singapore, with the Business Times reporting February that Facebook-parent Meta is not planning to renew its lease for seven floors at South Beach Tower near Suntec City.
BNP Paribas is also said to be considering giving back the six floors it occupies at the Ocean Financial Centre at Collyer Quay by the end of the year, according to a Bloomberg report last month. The French lender is reportedly moving its staff to a business park at Mapletree Business City outside the city centre.
Rents Stay Resilient
Despite the downsizing, Colliers’ He expects rent growth for Grade A offices in prime locations to remain resilient this year with occupiers choosing to sign renewals at higher rents instead of embarking on costly relocations.
“Nonetheless, office demand remains muted, with occupiers prudent in spending. Most still see the need to rationalize their footprint,” He said. “For the rest of the year, office demand and rents are likely to recover in tandem with the economy.”
Gross effective rents for Grade A offices in downtown Singapore rose 1.3 percent in the first quarter from the preceding three months to reach the highest level in 15 years, according to JLL data.
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