Mapletree Industrial Trust to undertake largest redevelopment project for $263m
It will add a build-to-suit facility to its Kolam Ayer 2 Cluster for a global medical device firm.
Mapletree Industrial Trust (MIT) will be redeveloping the Kolam Ayer 2 Cluster in Singapore into a high-tech industrial precinct at a total project cost of about $263m. According to an announcement, this marks the company’s largest redevelopment project to date.
The proposed redevelopment will include a build-to-suit (BTS) facility for a global medical device company headquartered in Germany. The BTS facility will account for about 24.4% of the enlarged gross floor area (GFA) upon completion.
Tham Kuo Wei, MIT CEO, said, “The proposed redevelopment will unlock value for MIT’s portfolio by repositioning the Kolam Ayer 2 Flatted Factory Cluster as a high-tech industrial precinct and utilising untapped plot ratio. In addition, the long-term lease commitment from the Anchor Tenant will provide stable income and increase the portfolio’s weighted average lease to expiry.”
Situated on land of approximately 346,270 sqft, the Kolam Ayer 2 Cluster at 155, 155A and 161 Kallang Way currently comprises two seven-storey flatted factories and an amenity centre. With a GFA of about 506,720 sqft and an utilised plot ratio of 1.5, the cluster is zoned for Business 2 use with its land lease tenure of 43 years commencing from 1 July 2008.
The new high-tech industrial precinct at Kallang Way is close to the MacPherson neighbourhood and a short drive to the CBD. It is served by the Central Expressway, Kallang-Paya Lebar Expressway and Pan Island Expressway as well as the Geylang Bahru Mass Rapid Transit station.
The proposed redevelopment of the Kolam Ayer 2 Cluster into a high-tech industrial precinct will increase the utilised plot ratio from 1.5 to 2.5. Upon completion of the proposed redevelopment, this will increase the total GFA to about 865,600 sqft.
Building on the successful leasing of the recently completed greenfield industrial development at 30A Kallang Place, MIT will target high value-add and knowledge-based businesses from the advanced manufacturing, information and communications technology sectors for the other blocks with total GFA of about 654,600 sqft.
The proposed redevelopment, which is subject to approval from the relevant authorities, is expected to commence construction in the second half of 2020 and complete in the second half of 2022.
According to MIT, the seven-storey purpose-built development will serve as the anchor tenant’s new central hub in Asia Pacific, which include facilities for manufacturing as well as research and development. Upon 3 the completion of the BTS Facility, the Anchor Tenant is committed to fully lease it for 15 years with annual rental escalations as well as an option to renew for two additional five-year terms
A comprehensive Tenant Assistance Package has been put together for the existing tenants at the Kolam Ayer 2 Cluster. Tenants will be offered an extended notice period of 12 months at preferential gross rental rates for their remaining leases at the Kolam Ayer 2 Cluster. They will not be required to reinstate their premises and will not need to compensate for early termination if they choose to move out prior to the expiration of their leases.
More than 469,200 sqft of space at Alternative MIT Clusters 3 has been set aside for tenants considering relocation. This is equivalent to about 1.6 times of the space presently occupied by the tenants.
Premises at Alternative MIT Clusters will be offered at discounted gross rental rates for new three-year leases. “These are about 7% to 33% lower than the average rental rates for new leases at the respective clusters,” MIT said.
Moreover, rent-free periods and longer fit-out periods of up to nine months, as well as cash subsidies of up to 16 months of gross rents at the Alternative MIT Clusters will be given to tenants who choose to relocate to Alternative MIT Clusters. Tenants who do not take-up a new lease at an Alternative MIT Cluster will also be given a cash subsidy equivalent to six months of gross rent based on preferential gross rental rates.