Advertising giant Publicis Groupe has leased around 55,000 square feet (5,110 square metres) of office space in GuocoLand’s Guoco Midtown project, joining a wave of multinational firms moving house to downtown Singapore’s newest buildings.
The Paris-based parent of Leo Burnett, Saatchi & Saatchi and Zenith is moving its Singapore operation to the S$2.4 billion ($1.8 billion) development on Beach Road, where it will occupy more than one floor in the 30-storey office tower and a portion of the conserved Midtown House building, according to Colliers which represented the communications group in the deal.
”Given our proficiency in offering comprehensive solutions that streamline the process of tenant relocations, we expect a sustained level of focus from top-tier tenants who are searching for well-equipped and efficiently operated properties, enriched with an array of amenities,” Bastiaan van Beijsterveldt, the agency’s managing director for Singapore, said in a statement on Tuesday.
The lease by the world’s third largest advertising and public relations group marks the second major office commitment in Singapore’s central business district to be announced by a global titan over the past fortnight, following Morgan Stanley’s confirmation last week that it is taking up five floors at the upcoming IOI Central Boulevard Towers in Marina Bay.
Complex Moving Closer to Completion
Publicis inked the lease agreement this quarter, joining multinational companies including German chemical company BASF, Chinese Internet firm NetEase Interactive Entertainment and Liechtenstein-based private lender VP Bank moving into the office component of the project with five buildings and three retail areas.
The ad agency’s commitment marks the largest office relocation deal in Singapore’s CBD this quarter according to Colliers. Online databases show units of Publicis currently operating at 16 Collyer Quay and 60 Anson Road in the city with Colliers commenting that “the lease for some of their existing offices will expire naturally.” Publicis representatives had not replied to queries regarding the apparent consolidation by the time of publication.
While Colliers declined to disclose terms of the agreement, Jade Lim, its associate director for tenant representation said office rents in the Beach Road-Bugis area currently average around S$9.90 per square foot per month. Listings on local property portals show asking rents of S$13 to S$14 per square foot per month in Guoco Midtown.
The office tower obtained its temporary occupation permit in late January while the remaining elements of the complex are slated to be completed in phases this year. By the end of March, tenants had already booked about 80 percent of the project’s office component, according to data from JLL.
Jointly developed by GuocoLand, the Singapore-listed property development arm of Malaysia’s Hong Leong Group and its parent, Guoco Group, the complex sits on a 3.2-hectare (7.9-acre) site with the first phase, which is located along Beach Road, housing the office and condo towers, two retail areas and Midtown House, a conserved building formerly known as Beach Road Police Station.
In it are the 33-storey Midtown Bay condo tower with 219 homes as well as a total of 50,000 square feet of retail space mostly located at Midtown Square and Midtown Market. The complex’s five-storey Network Hub offers up to 80,000 square feet of flexible office space, meeting rooms and conference facilities for lease on a short term or on-demand basis.
The developers aim to complete the first phase of the complex this year.
Situated across the road at Tan Quee Lan Street, phase two of the complex features the Midtown Common retail area as well as the 558-unit Midtown Modern condo tower, both of which are slated to open next year.
Flight to Quality Continues
Publicis’ shift to Guoco Midtown, which received a “platinum” rating on Singapore’s Green Mark regimen for sustainable buildings, comes as multinationals in Singapore increasingly favour new projects satisfying ESG requirements and appealing to talent in a competitive labour market.
Morgan Stanley confirmed to Mingtiandi last week that it will relocate its Southeast Asia headquarters to IOI Properties’ upcoming IOI Central Boulevard project in Marina Bay late next year after signing a deal for around 100,000 square feet of space in the project.
Colliers head of research for Singapore, Catherine He, said that despite Guoco Midtown entering the market, occupancy in grade A offices in the city’s downtown core remained at around 97 percent in the second quarter.
With supply remaining tight, He said rents rose by 0.6 percent from the end of March through June to reach S$11.53 per square foot – up from S$11.46 per square foot in the first quarter.
Despite this uptick, the veteran analyst expects rental growth for grade A offices in Singapore’s central business district to remain muted with tariffs inching up by 1 to 2 percent for the full year of 2023.