Friday, April 06, 2007

Visit to Phase Z.Ro Technopreneur Park

Went to meet a client somewhere around Dover yesterday. Upon going back, I decided to pop by the Phase Z.Ro Technopreneur Park located near Buona Vista MRT station. The technopreneur park is owned by JTC, and is said to be providing quality incubation space for technology entrepreneurs.

The techno park is actually made up of huge container-converted offices, with a total of two storeys for each container. The units come in 3 sizes: 27sqm, 54 sqm and 108 sqm. Each unit comes with individual aircon, lightings, carpeted flooring and broadband connectivity.

The rental are as follows:
27 sqm - $30/sqm (Net Rental rate) + $4.50/sqm (Service Charge) = $931.50 (Gross Rental per month)
54 sqm - $26.95/sqm (Net Rental rate) + $4.50/sqm (Service Charge) = $1698.30 (Gross Rental per month)
108 sqm - $23.05/sqm (Net Rental rate) + $4.50/sqm (Service Charge) = $2975.50 (Gross Rental per month)

Well, not all companies are “eligible” to apply. To apply for a space at Phase Z.Ro, the company should be:

  1. less than 3 years old
  2. have a turnover of less than S$1 million per year
  3. be involved in technology such as: Information Technology, Software Development, Telecom Technology, Application Service Providers, Internet Content Providers, Networking Technology, Wireless Technology, Technology related to B2C & B2B businesses, Peer-to-Peer technology or Distributed Computing Technology.

Alright, my company seems to be eligible, but I am not looking for an office space yet. Maybe next year, if everything goes well and I get to rope in a few more people, I may need to have an office space. But not now. So why am I visiting the techno park?

One of the reasons is I am quite curious of how this techno park looks and feels like. It claims to be an incubation techno park, and thus I actually expects it to have a vibrant kind of environment. I like the idea of having lots of young startups located within one techno park as it can provide a vibrant environment to stimulate interaction, innovation and creativity between like-minded technopreneurs.

But from what I see, there seemed to be quite a number of vacant office spaces, even though the whole park is not exactly that big. And most of the rest of the offices don’t have people around (Yes, I am a peeping tom). It doesn’t really fit my expectation of a “vibrant work environment for like-minded technopreneurs”. Or did I go at the wrong timing? Even their lobby is empty.

Anyway, let’s take a closer look at the rental rates.
27sqm (290sq ft) - $931.50
54sqm (580sq ft) - $1698.30
108sqm (1162sq ft) - $2975.50

I assumed the broadband connectivity is included in the rentals. But I highly suspect that the individual aircon bills is not included. Ok, let’s ignore the aircon bills and take the above as the gross rental.

I do not really know the rates now, but I know the rates 1-2 years ago as I was looking for office spaces back then. For small offices (200sq ft to 500sq ft), the rates should be between $2/sqft to $3.50/sqft, depending on locations. For larger offices (>1000sqft), the rates will be much lower, around $1.50/sqft.

So let’s say comparing to another office space of 300 sqft, at the rate of $2.50/sqft, the overall rental will be $750. Normally, this would include PUB bills and may or may not include aircon bills. To subscribe for business broadband unlimited, the cheapest rate offered by Singnet is $252/mth (promotional price will be much lower). So ultimately the gross rental plus broadband for a normal office space of 300sqft can be expected to be around $1000 or lower, which is roughly what Phase Z.Ro offers.

Now, let’s consider bigger offices (though startups normally don’t need large offices). For an office space of 1200sq ft, it is quite normal to get a rate of $1.50/sqft or even lower. Taking account a business broadband unlimited rate of $252/mth, the gross rental plus broadband for a normal office space of 1200sqft can be expected to be around $2050 or lower, which is much lower compared to what Phase Z.Ro offers.

This somehow baffles me. I actually expect an incubation techno park to offer a rate much lower than the outside market, since it has such a stringent eligibility criteria and it positions itself as an incubator. But from what I see, the price isn’t that competitive. This may be the reason why it is not attracting lots of technology startups to create a vibrant techno park environment.

We need to know that, not all startups can secure fundings from venture capitalists, and this is especially true in Singapore where many of the venture capitalists come from traditional business background and may not have the knowledge or familiarity to invest in high tech startups. Moreover, most startups will need to invest time and resources into R&D before it starts to collect revenue. Thus, from the view of a cash-strapped startup, the attractions of Phase Z.Ro isn’t that great, even though I personally would like to see such a incubation techno park to succeed.