0.2% - 0.5% Of Singapore Office Stock Needed To Be Repurposed Annually To 2033, Lower Than Global Stock Of 0.7% - 0.9%
In Savills’ analysis of the demand-and-supply dynamics of six major global office markets, Singapore only requires 0.2% - 0.5% of office stock to be repurposed annually. This is below the estimated 0.7% - 0.9% of total office stock that needs to be repurposed each year to strike a balanced market by 2033 – equivalent to between three and four Empire State Buildings across the five cities in 2023 values (0.98 trillion sq ft) annually, until 2033.
Repurposing in this context means redeveloping office buildings for other uses such as residential, retail, leisure, health, and education. For these busy cities with growing populations, new residential developments and amenities such as schools, healthcare facilities, shops and parks will be needed. Younger people also often want to live within walking or cycling distance of work. It has become imperative for markets adapting to post-pandemic realities to repurpose offices to residential spaces and amenities.
Singapore’s lower requirements mean that office stock has been utilised more effectively that there is not much excess stock which needs to be repurposed. Similarly, Sydney also has low requirements of 0.3% - 0.7%. New York could see the greatest transformation, with between 1.1% and 1.3% of office space needing to be repurposed into alternative uses each year to create equilibrium by 2033. (see chart below)
With the potential to achieve higher rents serving as a strong incentive, some landlords are able to retrofit their stock to new standards. For owners of lower-grade stock, this may prove too expensive and does not justify the investment. In these cases, repurposing becomes the obvious or only alternative.
Vincent Lau, Executive Director, Project Management, Savills Singapore says, “Efficiency is key, especially given high office rental costs, resulting in tenants increasingly opting to reduce the size of their offices by boosting space efficiency. Landlords and tenants aiming to enhance their spaces and embrace sustainability should recognise that green initiatives now extend beyond simple office fitouts. To maximise effectiveness, they should align retrofit projects with comprehensive green requirements, adopting a cohesive approach to sustainability.”
Public-sector support is crucial for any successful transition of office stock into a wider range of uses. Governments, city administrations, policymakers and planners will play a pivotal role in shaping the future of workspaces – through incentives, changing land usage and supporting sustainable urban environments. Developers can also be encouraged to rethink ageing office stock through financial incentives for higher densification.
In Singapore, the government is driving change through its Green Plan 2030, a long-term roadmap to make the city more sustainable and resilient. Retrofitting building stock is a key component of this, given that the flight to new, more sustainable buildings has led to rising vacancy rates in older buildings in the Central Business District (CBD). The government has grants for green upgrades for buildings, as well as planning incentives such as encouraging a net increase in floor area intensification in mixed-use developments. This has the added benefit of bringing a mix of uses to enliven the CBD on weekends and after office hours.
Alan Cheong, Executive Director, Research and Consultancy at Savills Singapore, says, “Whether it’s the greening of older buildings or the repurposing of offices, the role of the government is key in achieving those aims. Singapore has offered incentives to certain areas with the hope that older buildings in those locations may get repurposed or redeveloped to mixed uses, thereby injecting more vibrancy to the CBD on both weekends and in the evenings.”