WHEN the former Pasir Panjang ITE building at 991 Alexandra Road was put up for tender last year, property investment firm Richzone jumped at what it saw as a prize plot.
The site, opposite the PSA Building, offered 265,000 sq ft of office space in an established commercial and industrial zone.
'It was delivered to us in a very rundown condition because it had been empty for eight years,' Richzone said.
The firm, set up by a group of property veterans, planned to turn the building into modern low-rise offices that could be leased out to other tenants.
But it ran into flooding and power problems and broke the budget because of inflated construction costs and unexpected 'invisible expenses'.
Still, the work has paid off. The first phase of offices has been fully taken up by big-name tenants, such as LG Electronics. They are paying about a third of what they would have to fork out downtown.
Another company, Hean Nerng, also got more than it bargained for with the former Gan Eng Seng Secondary School.
Luckily, Mr Kelvin Lim, the managing director of the space resource management firm, is an old hand at converting worn-out buildings for new uses.
He was attracted by the building's size - it sits on a 290,626 sq ft plot in Raeburn Park near Outram - and its low rent.
Hean Nerng is paying about $200,000 a month, or $1.25 per sq ft (psf), and sub-letting the converted offices at about $4.50 psf. About 40 per cent of the building has been occupied by tenants that include the Marketing Institute of Singapore, the National Safety Council and several advertising companies.
A lot of work had to be done to maximise the building's potential office space. The firm also had to spend nearly $1 million to upgrade the substation to provide air-conditioning.
Mr Lim, however, is confident that the whole building will be rented out by year-end, even though demand has slowed because of weaker sentiment and because more office space has been released by the Government.
'We managed to overcome challenges greater than we had expected, so there are no regrets,' he said.
