No harm in oversupply of business and science parks?

Roughly 7 million square feet will flood the said market but why is CIMB not worried?

With 61% of this new space already pre-committed and demand expected to persist despite a global slowdown, the brokerage firm believes the risks related to this are being unjustly magnified.

Here's more from CIMB:

Some 7m sf of business/science-park space could enter the market between 2012 and 2015. Almost 40% of this new supply is due for completion in 2012. Although there are some doomsday forecasts in the market, we believe these are over pessimistic. Pre-commitments for the new projects are stronger than anticipated. For the whole 7m sf of new supply, pre-commitment is 61%. For the 2.8m sf of new space completing in 2012, 68.5% has been pre-committed.

Notably, the largest development due to be completed this year, One@Changi City, is already 80% pre-committed and anchored by Credit Suisse. Its smaller neighbour UE Biz Hub East, also completing this year, is 50% pre-committed and anchored by CISCO. Pre-committed rentals are S$3.50-4.00psf.

Unlike its office and retail peers, industrial space and in particular built-to-suit business parks tend to have pre-committed tenants even before construction. This greatly reduces the uncertainty of filling up the new supply.

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