What do tech firms in Singapore look for?September 18, 2017 / By
In an era where technology is disrupting a wide spectrum of industries and offering new and efficient solutions for everyday work processes, the growth of technology companies has been phenomenal. And so have the needs in their real estate requirements.
The rapid growth of tech firms’ real estate footprint
Technology companies have been expanding their real estate footprint aggressively to cater to their rapidly growing workforce. The race to attract top millennial talents with workplace facilities such as game rooms, nap rooms and large pantries to boost staff welfare has also led to the enlarged requirement for office space.
Examples of technology companies that expanded rapidly in recent times include LinkedIn, Grab and Facebook, which leased an estimated area of 50,000, 100,000 and 250,000 sq ft, respectively.
Tech firms are upgrading to higher-grade premises
The current wave in the growth of technological applications and usage has armed these technological companies with more financial muscle to pursue the upgrading of their work premises from industrial/Grade B office space to Grade A office space.
For example, Facebook moved from 158 Cecil Street to South Beach Tower to accommodate their increase in headcount back in 2015.
In more recent news, the ride-hailing app Grab will relocate from an industrial premise to the newly completed Marina One office development in the CBD around late 2017/early 2018.
Tech firms favour CBD locations
In trading up, technology companies are also showing a strong preference for CBD locations. This can be attributed to the need to attract top millennial talents, as well as to the increasing emphasis technology companies are placing on the prestige and branding of their office address.
Although a few technology companies such as Canon, Oracle and Google have relocated into business parks and out of the CBD over the past three years, these companies are the exception. Aside from cost savings, these moves were also motivated by the lack of suitable space in the CBD for customisation for branding purposes.
Table 1: Major technology office tenants in Singapore’s CBD
Source: JLL Research, 2Q17
Despite the soft demand for office space amid the slowing economy, the growth of technology companies provides a positive vibe in the Singapore’s office property market.
With Singapore’s currently flourishing start-up community and ecosystem, there will be more legroom for technology companies to grow their presence here. Additionally, Singapore is a mature market with high Internet and mobile penetration and offers a ready consumer base that is willing to embrace new technologies. This will attract more technology companies to set up offices and launch their products here, especially with Singapore serving as a gateway to Southeast Asian countries and, to a smaller extent, the rest of Asia Pacific. Singapore’s pro-business, low tax rate environment and robust regulatory system are further draws.
To read more about the factors affecting technology companies’ selection of office space across Asia-Pacific, download our latest research paper here.
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