Asset Management Blackrock has put Asia Square Tower 1 on the market for sale. The Grade A office building has a net lettable area of approximately 1.2 million square feet of office space and about 40,000 square feet of retail space on its ground and first level. The iconic office building, located in the New Downtown Core, houses blue chip office tenants such as Citi, Julius Baer, Google and Marsh, and retail tenants such as Imperial Treasure and TAO Seafood Asia.
The price tag of $4 billion works out to be $3,200 per square foot of net lettable space. Developed in 2007, Asia Square Towers 1 and 2 are one of the earliest Grade A buildings to be built in the New Downtown Core area. Its proximity to Downtown MRT station, Raffles Place MRt station, Tanjong Pagar MRT station and Telok Ayer MRT station makes it an attractive location for both MNCs and financial institutions. The asking rent has been hovering around $15 per square foot.
Market watchers are saying that the sale of Asia Square Tower 1 by Blackrock could be a sign that the rent for the Grade A office buildings has peaked and it could be great opportunity to unlock equity for more other opportunities. With an estimated 3.8 million square feet of Grade A office space scheduled to be completed in the core CBD in 2016, the rental market for Grade A office building will have to stay competitive to attract tenants. The lease renewal could be up for major tenants in Asia Square Tower 1 next year and with a challenging market ahead, it’s only logical to divest their interest at this point of time.
Another Blackrock managed fund completed the sale of AXA tower; a 50-storey office building in Tanjong Pagar in January this year for $1,17 billion to a consortium of investors led by the Perennial Real Estate Holdings. It worked out be around $1,735 per square foot of net lettable area with a remaining lease tenure of 66.5 years at the point of sale.