Guoco Midtown Office Project Opens Doors to Tenants in Singapore 

GuocoLand has obtained the temporary occupation permit for the office component of its S$2.4 billion ($1.83 billion) Guoco Midtown project, opening the doors for tenants to begin occupying the 30-storey tower in Singapore’s downtown core, the Singapore-listed developer announced Tuesday.

The milestone allows GuocoLand, the Singapore property development arm of Malaysia’s Hong Leong Group, to begin formal leases for space in the 709,000 square foot (65,868 square metre) grade A office project on Beach Road, with company officials looking forward to a revenue boost from the project above Bugis MRT station.

“The phased completion of Guoco Midtown will grow our portfolio of investment properties and boost our recurring income,” GuocoLand chief executive officer Cheng Hsing Yao said in the statement.  “Like how Guoco Tower transformed and uplifted Tanjong Pagar, Guoco Midtown will in time also do the same for the Beach Road-Bugis area. This will enhance GuocoLand’s track record as an expert in urban rejuvenation.”

Including agreements in advanced stages of negotiations, GuocoLand says that the office project, which received a Platinum Award under the city-state’s Green Mark code for sustainable buildings, is already 80 percent pre-committed as tight supply in Singapore’s office market has continued to boost rents in the Southeast Asian financial hub.

Sustainable Appeal

Companies set to move into the office building, which forms part of the 3.2-hectare (7.9-acre) Guoco Midtown integrated development include German chemical company BASF, Chinese Internet firm NetEase Interactive Entertainment and Liechtenstein-based private lender VP Bank.

The project has also attracted local tenants including shipping firm Pacific International Lines (PIL). Lars Kastrup, the company’s chief executive, said in a statement that his firm was attracted to the project in part by its sustainability and flexible office features as the company modernises its business.

“As PIL aims to be a future focused organisation, we would like our workspace to support us in developing a collaborative and innovative workforce. Guoco Midtown’s office spaces, which facilitate good physical-digital alignment, are well suited to achieve our goal,” Kastrup said. “Being located in an integrated and green development like Guoco Midtown, with its conveniences and offerings such as the Network Hub, will enable us to drive connectivity and sustainability as a dynamic shipping line.”

PIL is relocating to the tower after having sold its headquarters at 140 Cecil Street to a joint venture between local private equity firm TE Capital Partners and LaSalle Investment Management in a S$324 million deal that closed in February last year.

GuocoLand said other tenants committing to the building come from the banking and finance, professional services, consumer and technology sectors, as well as from specialty sectors including shipping, energy and chemicals.

Retail, Condo Elements on Way

Jointly developed by GuocoLand and its parent, Guoco Group, the Midtown complex also incorporates the Midtown Bay condo tower, which offers 219 high-end units across its 33 storeys, as well as three retail hubs offering a combined 50,000 square feet of total space for shops and restaurants.

Midtown Bay, together with Midtown Square and Midtown Market retail elements, and Midtown House, a conserved building formerly known as Beach Road Police Station, are set to be completed this year as part of a phased rollout.

Also slated to be finished in 2023 is the five-storey Network Hub flexible office element of the complex, which offers up to 80,000 square feet of space including private offices, desk space, meeting rooms and conference facilities for lease on a short term or on-demand basis.

Across the road at Tan Quee Lan Street, the second part of the complex, which includes the Midtown Common retail cluster as well as the 558-unit Midtown Modern condo tower, is scheduled to be completed in early 2024.

This portion of the project is being developed by GuocoLand together with Hong Leong Group and its Hong Realty unit, on a 124,107 square foot parcel they won in 2019 government land sale.

Rental Growth to Slow

The new supply from Guoco Midtown is flowing into a market where tight supply has led to steady increases in grade A office rents.

Statistics from the Urban Redevelopment Authority show that median rentals in Singapore’s downtown core and the Orchard planning area hit S$11.16 per square foot per month in the fourth quarter, which was up 2.5 percent from the S$10.89 per square foot average in the third quarter and 6.9 percent more than the level in place a year earlier. That increase in the October through December period marked the seventh straight quarter of office rent growth in Singapore.

Grade A office vacancy in Singapore’s core districts stood at 9.5 percent in the fourth quarter, which was down from 12.4 percent at the end of September 2021.

Along with a softening business climate, the incoming supply from Guoco Midtown and from IOI Properties’ Central Boulevard Towers project in Marina Bay will likely temper office rental growth this year according to Chern Woon Lam, research and consulting head at property consultancy Edmund Tie.

“Rental growth is expected to moderate, as firms veer towards consolidation and rightsizing their space needs rather than outright expansions,” Lam said in a note last week, predicting that premium and grade A office rents in Singapore’s prime districts will rise by 2 to 4 percent and 1 and 3 percent, respectively, this year.