Food factories to offer higher yields compared to office, retail: Colliers

/ EdgeProp
May 30, 2019 5:06 PM SGT
Source: Colliers
In line with rising demand for food factories and central kitchens in Singapore, real estate consultancy Colliers expects such facilities to offer more attractive yields compared to office and retail, it highlighted in a report released on May 29.
Colliers forecasts that food factories with 30-year land tenures are able to offer yields of about 6-7%, compared to 3.25-3.65% for office properties, and 4.4-4.9% for retail properties.
Demand for food factories and central kitchens in the country has risen over the years, with a focus on major food zones in the east, north-east and central regions, the report states.
A total of 637,115 sq ft of food factory space (equivalent to 1-2% of current food factory stock) has come into supply in 2019 to date, a surge from the 31,431 sq ft completed in the whole of 2018.
Source: Colliers
Factory rents and prices in major food zones in the east, north-east and central regions have outperformed the west and north regions, based on JTC data, according to the report. Colliers believes that this is due to their close proximity to the city centre or residential estates, which facilitates food catering and delivery services.
However, in established food zones in the west region (Pandan Loop, Jalan Tepong) monthly rents can range from $1.50-2.40 psf, while those in the north region (Senoko Avenue, Mandai Link) can fetch $1.80-2.40 psf.
Mature food manufacturing areas such as MacPherson, Pandan Loop and Bedok North are able to maintain occupancy between 80% and 100%, reveals the report. Meanwhile, those in newer and further-off locations, such as Tuas and Senoko, tend to have occupancies of around 60%.
Colliers also found that well-located food factories with better facilities such as freezers can fetch about 25-35% higher prices than others. In March 2017, US-based PGIM Real Estate acquired 1 Buroh...