SEA Ltd, the parent company of e-commerce platform Shopee, looks to be consolidating its Singapore footprint into two main buildings – Rochester Commons and 5 Science Park Drive – from the current four main premises that it is leasing in one-north and Singapore Science Park.

The Business Times had reported in November 2022 that Sea was seeking a replacement tenant for the roughly 200,000 sq ft of office space it had leased from CapitaLand Development in Rochester Commons near the Buona Vista MRT interchange station.

However, word in the market is that last year, Sea decided to stop looking for a replacement tenant for that space. The group’s lease in the development is said to be for about 10 years.

The space is in the upper part of the 17-storey tower in the Rochester Commons project.

Also in the tower are a shared executive-learning centre named Catapult, and the Citadines Connect Rochester Singapore, a serviced residence with a hotel licence.

"Shadow office space may well increase this year as layoffs by major tech firms and banks in the US extend to Singapore." - TRICIA SONG OF CBRE

The campus-style development on a 2.4-hectare site also incorporates 12 heritage black-and-white bungalows – some used as offices, and the rest, as F&B or retail spaces.

The project was completed in phases in the second half of 2022, but the space leased to Sea has not been occupied, said industry watchers.

The Singapore-based, New York Stock Exchange-listed group is expected to fit out and move into the premises.

Rationale for change in strategy

Some market observers suggested Sea changed its strategy for Rochester Commons, partly because it may have found it challenging to find a single replacement tenant willing to commit to the entire 200,000 sq ft of office space – and for a long lease duration at that.

A seasoned business space-leasing agent said that, as Sea has relatively near-term expiries for its leases at two other buildings – Galaxis and Solaris – it would make more sense for the group to give up those spaces without penalty and occupy the Rochester Commons space.

Currently, Sea’s headquarters, along with its game-development and publishing unit Garena, are operating out of Galaxis, which is directly linked to the one-north MRT station.

Sea leases a substantial amount of business park space – about 270,000 sq ft by some accounts – in the building, which is owned by CapitaLand Ascendas Reit.

Sea’s lease is said to be expiring late next year.

At the nearby Solaris building at 1 Fusionopolis Walk (owned by the privatised Soilbuild Business Space Reit), Sea occupies two floors totalling about 44,000 sq ft, with the lease originally scheduled to end late this year.

Word in the market is that as Sea had expressed its intention to give up that space, the landlord has found a replacement tenant from the healthcare sector for one of the floors, which Sea is expected to vacate in the next few months. Efforts to find a replacement tenant for the other floor are ongoing.

Meanwhile, Shopee occupies the whole of 5 Science Park Drive under a long-term lease with CapitaLand Development.

The six-storey business park property, with about 240,000 sq ft net lettable area, was completed in 2019.

Sea declined to comment when contacted by BT.

Although Sea has more than a year to go before its lease at Galaxis ends, some analysts said this may be a good thing for the group, because it is likely to need some time to finish fitting out the new offices at Rochester Commons.

“At the end of the day, Sea may still retain some space in Galaxis. Things are fluid,” said an observer.

BT has also learnt that Sea had earlier planned to lease from CapitaLand Development the business park space at 7 Science Park Drive, next to the building in which Shopee has a long lease.

However, Sea is said to have aborted the deal around Q2 2023, forfeiting the deposit it had paid to CapitaLand.

Tougher operating conditions for Sea

Sea is facing tougher operating conditions, especially in the e-commerce space, where Shopee is staring at aggressive competition in the region, not only from the merged entity of TikTok Shop Indonesia and GoTo’s Tokopedia, but also Lazada, online fast-fashion retailer Shein and Boston-based marketplace Temu.

On a brighter note, Sea’s decision to occupy the offices it has leased at Rochester Commons has contributed significantly to the drop in the stock of shadow office space in Singapore. The term refers to excess space on an existing lease obligation that a tenant would like to give up, by finding a replacement tenant for the landlord.

CBRE Research data showed that Singapore shadow office stock shrank from about 700,000 sq ft in Q1 2023 to 170,000 sq ft in Q4 2023. Tricia Song, the property consulting group’s head of research for Singapore and South-east Asia, said: “Shadow office space may well increase this year, as layoffs by major tech firms and banks in the US extend to Singapore.”