About 30 per cent of upcoming Frasers Tower, in the heart of the Central Business District, has been leased - or has received a leasing proposal, marketing agents say.
The relatively strong interest comes even though the 38-storey office building in Cecil Street is not due to be ready for tenants for more than a year.
The building was officially launched for leasing yesterday by Frasers Centrepoint.
But marketing agents CBRE and JLL said that they had received proposals from interested tenants ahead of the launch.
The interest came from multi-sector conglomerates, legal services and technology firms, said Mr Low Chee Wah, head of commercial at Frasers Centrepoint Singapore.
The company also announced its first signed lease with The Executive Centre, a serviced office provider, which will take up an entire floor covering 20,000 sq ft.
Frasers expects to get a temporary occupation permit for the building in the second quarter of 2018, which it says is particularly timely.
"With Marina One achieving a 60 per cent pre-lease, a lot of the new buildings are spoken for or gradually spoken for," said Mr Low.
"I think rents will bottom in the middle of this year, or the second half of the year where we will see strengthening in the market. At the end of the day, we are in the situation where we are completing the building in a strengthening market."
Experts at the launch yesterday said they expected some tenants to come from other buildings.
"If you look at what is typical in any leasing cycle, there's a fair amount of movement. A lot of deals at Marina One and Guoco Tower are tenants out of other buildings," said Mr Chris Archibold, head of markets at JLL.
Mr Low said it was not always tenant switches but also firms expanding, such as Facebook, which has taken up a larger space in Marina One.
"It's much easier to expand in a new building rather than an existing building, from a planning point of view," he explained.
CBRE managing director Moray Armstrong said the supply pipeline favours Frasers Tower, as there are just a few new developments in the core CBD from mid-2017 until the end of 2020: Marina One, UIC Building and the redevelopment of the CPF Building.
Frasers Tower has 663,000 sq ft in total net lettable area. An adjacent three-storey building will host food and beverage tenants.
Dr Lee Nai Jia, head of South-east Asia research at Edmund Tie and Company, said that "30 per cent in this market is not bad".
He said office rents will keep falling, bottoming out towards the start of 2018, given global uncertainty. This would be in Frasers' favour as the building will be completed when the market starts to pick up. He added that newer buildings do get "better pick-up rates", and that their rental rates were not declining, in contrast to older buildings.
This article was first published on Feb 8, 2017.
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