Standard Chartered Bank, which will lease close to half a million square feet

The developers of Marina Bay Financial Centre (MBFC) are said to have secured the project’s first office tenant. Industry sources say it is likely to be Standard Chartered Bank, which will lease close to half a million square feet in what will be one of the biggest office leasing deals in Singapore.

Stanchart’s lease is likely to be for more than 10 years, market watchers reckon. It remains to be seen what the bank plans to do with the 130,000 sq ft or so it now leases at 6 Battery Road, owned by CapitaCommercial Trust (CCT).

The MBFC developers are also said to be at various stages of talks with a string of other big-name banking and financial groups - including UBS, Merrill Lynch, HSBC, Credit Suisse, ING, JPMorgan, BNP and DBS. ‘It’s probably logical to assume these are the sort of names that would be targeted as a tenant list for the project,’ a property market watcher said.

It is not known what sort of rent Stanchart will pay at MBFC, but market watchers believe it could be in the ballpark of $8-$9 per square foot (psf) a month, judging by current rents in the area. The last unit at the nearby One Raffles Quay, believed to be about 4,000 sq ft, was leased at gross monthly rent of about $12 psf - almost three times the effective rent when leasing there began in 2004.

The first phase of MBFC includes two office towers with about 1.65 million sq ft of net lettable area, slated for completion in early 2010. The second phase, expected to be ready by late-2011, will have another office tower with more than one million sq ft of lettable area.

Stanchart’s space at 6 Battery Road is under a long-term lease that expires in January 2020 and is subject to a rent review to open market value every three years, according to information made public by landlord CCT in March 2004, around the time of its introduction to the Singapore Exchange, and in an equity-raising exercise last year.

Will Stanchart continue to lease all of this space after MBFC is ready?

‘They could still want to reserve some space at 6 Battery Road for potential expansion, especially given the scramble among big banks for office space in Singapore,’ said an office market watcher. ‘A possible scenario may be for Stanchart to continue leasing the space at 6 Battery Road from CCT but then sub-let any space it does not need in the near term to other tenants.’

This is what Stanchart is understood to have done in the past at the building, although it has since taken back the space from sub-tenants amid the current wave of expansion by banks and the shortage of offices in Singapore.

MBFC is being developed by a consortium that comprises Keppel Land, Cheung Kong Holdings/Hutchison Whampoa and Hongkong Land.

The joint venture clinched the 99-year leasehold site in an Urban Redevelopment Authority tender in July 2005. The consortium bought the site, which can be developed into a maximum gross floor area of about 4.7 million sq ft, in two phases.

It paid $381 psf per plot ratio for the first phase in 2005, and an effective land price of $435 psf ppr for the second phase earlier this year under a formula that factored in an increase in office land values in the vicinity since the initial bid in the 2005 tender.

Source: The Business Times, 05 April 2007