Singapore - There will be a need for office space and infrastructure when the economy picks up, sais Minister of National Development Mah Bow Tan.

Office rentals have fallen sharply in the first quarter of 2009, and some buildings in Raffles Place are even said to be offering single-digit office rental rates. The government called the glut in office space a short-term problem in an attempt to ease fears of having excessive office space with falling demand and even more offices to come up this year.

Developers will now have the flexibility to phase in the office space. “Some of those developments may be delayed ... so I think such short-term adjustments in the timing, (we’ll) leave it to the developers, they’ll know what to do,” said Mah during a site visit around Marina Bay.

The Marina Bay area will be completed in ten to 15 years, and there will be new space for Singaporeans to work in. A Double Helix Bridge and the Art Park in the area would be ready by the end of this year, according to a report in Today.

As companies are consolidating space and holding back expansions, office rental prices slid an average of 18% island-wide to keep tenants from fleeing. The average monthly rent for Grade A space has fallen to $12.30 per square feet.

However, sources say that rents under $10 per square feet are still under negotiation in many cases, and transactions are not affirmative. Furthermore, only existing tenants renting large spaces with good corporate profiles or taking long leases can benefit from the low rental rates.

Hence, new projects now have to propose better deals and persuade clients to bear the cost and hassle of relocation.