Transit-oriented developments raise office rents in prime locations

It also boosts footfall and lowers vacancies in urban districts.

Transit-oriented developments (TODs) are emerging as vital components in the urban landscape as it drives up office rents with lower vacancy rates, drawing in major tenants.

Govinda Singh, Colliers Executive Director of Hotels, Leisure & Real Estate Advisory in Asia, pointed to examples like Kings Cross in London and Fujian in Shenzhen, where TODs have attracted major anchor tenants such as Google, Meta, and OpenAI.

“The rents in these areas can be as much as 20% higher than prime office rents in similar locations,” he observed.

In Singapore, the Jurong East TOD area is a prime example of this trend. Preston Soon, Senior Sales Director at Mindlinks Group, explained that rising rents are inevitable due to the growing demand in these transit hubs.

“As you add more shopping centres, residential developments, and business activities around the transit hub, the perceived value increases. Higher footfall and better infrastructure lead to higher rents, which is a natural progression,” says Soon.

“When a large group of people work, study, and recreate in one place, their activities grow. Transit infrastructure improves, leading to more buildings and shopping centres, which naturally increase public transit usage,” Soon added.

Singh echoes this sentiment, explaining that TODs foster the creation of "community social districts" where the focus shifts from private transport to more sustainable options.

“The whole idea behind a TOD is to increase public transit usage and create a sustainable, mobile environment,” Singh noted, adding that the concept of the "five-minute city" or "15-minute city" is becoming more prominent in urban planning as a result.

Despite the rising costs, property agencies like Mindlinks are finding ways to help mitigate the impact on property owners. “We’ve introduced fixed-rate property services to help owners cut down on costs, recognizing the trend of rising rents,” Soon said.

TODs are not only reshaping the urban landscape but also driving real estate value. As Singh concluded, “Part of a TOD’s role is to regenerate or bring new life into areas that were perhaps neglected. Singapore itself is practically a TOD, and its transformation since Changi became an international hub is proof of the concept’s success.”