Industrial rents up 2.1% q-o-q in 4Q2022, bringing full-year growth to 6.9%

/ EdgeProp Singapore |
Multi-user factories saw the fastest growth in rents in 4Q2022, registering an increase of 2.6% q-o-q (Picture: Samuel Isaac Chua/The Edge Singapore)
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SINGAPORE (EDGEPROP) - Industrial rents grew by 2.1% q-o-q in 4Q2022, maintaining the same pace of increase recorded the previous quarter, based on data released by JTC on Jan 26. This marks the ninth consecutive quarter of growth, bringing full-year rental growth to 6.9% for 2022, outstripping the 2% increase logged in 2021.
Prices of industrial properties grew by 1.7% q-o-q in 4Q2022, bringing full-year price growth to 7.5%. “This is the fastest pace of increase for both prices and rents since 2012,” remarks Lee Sze Teck, senior director, research at Huttons Asia.
Meanwhile, overall occupancy for industrial properties dipped by 0.3 percentage points in 4Q2022 to 89.4%. The decline was underpinned by a significant pick-up in new completions, with 5.2 million sq ft of industrial space completed in 4Q2022 - the highest since 2017. The new supply outstripped demand, which came in at 2.9 million sq ft in 4Q2022, based on total occupied stock.
Multi-user factories saw the highest growth in rents in 4Q2022, registering an increase of 2.6% q-o-q. Tricia Song, head of research, Southeast Asia at CBRE, believes the growth could be due to higher rents achieved at recently completed projects such as INSPACE at Industrial Road and 165 Kallang Way. “While overall occupancies for multi-user factories have dipped 0.1 percentage point q-o-q and 1.1 percentage points y-o-y in 4Q2022, CBRE Research believes that there is a flight to quality as demand for newer and high-quality factories especially hi-tech industrial space has remained healthy and these command higher rents,” she adds.
For the whole of 2022, multi-user factories saw rental growth of 8.3%, the highest across all industrial segments and surpassing the 2.5% growth registered in 2021. “We believe this is driven largely by the supply crunch for good quality and high specification industrial space,” remarks Tay Huey Ying, head of research and consultancy, Singapore at JLL. Tay notes that net absorption for multi-factory space in 2022 is the highest to date.
Warehouse rents increased by 2.2% q-o-q in 4Q2022, accelerating from the 1.9% growth registered in 3Q2022. Warehouse occupancy improved 0.9% q-o-q to reach 91.7% in 4Q2022, which Song highlights is the highest since 3Q2015. Full-year warehouse rental growth clocked in at 7.9%, compared to 2.7% in 2021, which CBRE’s Song attributes to sustained demand as businesses continued their “just-in-case” inventory strategies in view of the ongoing Russia-Ukraine conflict and tight new supply.
Lam Chern Woon, head of research and consulting at Edmund Tie, points out that warehouses were the sole segment that recorded an improvement in occupancy in 4Q2022. “Despite some new warehouse completions in the quarter, overall warehouse stock shrank by 9,000 sqm; this is likely due to the removal of some stock for modernisation to fit modern logistics needs,” he expands.
Meanwhile, single-user factory rents rose by 1.3% q-o-q, while business park rents grew by 1.0% q-o-q in 4Q2022. Brenda Ong, executive director, logistics & industrial at Cushman & Wakefield, adds that the business park segment remains a two-tier market, where demand and rents are considerably stronger for city-fringe business parks as compared to their outlying counterparts.
Going forward, Edmund Tie’s Lam expects softer rental growth in 2023, as a weaker external environment. “Industrialists are expected to remain cautious and leasing demand from outward-oriented sectors, such as electronics and manufacturing, will likely weaken, weighed down by the global semiconductor downcycle,” he explains.
In addition, incoming supply is also expected to temper rental growth. Some 18.9 million sq ft of new supply is expected to come online in 2023, which Huttons’ Lee highlights is the largest amount since 2017. Nearly half of the new completions comprise single-user factories, while new warehouses will make up 5.3 million sq ft.
Leonard Tay, head of research at Knight Frank Singapore, believes that industrial rents will continue growing in 2023, albeit at a moderated pace. “Despite the upcoming industrial supply in a time of decreasing exports and decaying manufacturing sentiment, Singapore will continue to attract fixed asset investment into the manufacturing sector as global manufacturers look for locations with political stability, an educated workforce and modern infrastructure as part of flight-to-stability strategies,” he opines.
He anticipates industrial rental growth of 1% to 3% for the whole of 2023, adding that in the logistics segment where supply is tight, rents for quality warehouse space may increase by 3% to 5%.
Cushman & Wakefield’s Ong concurs. She projects industrial prices and rental growth to moderate to around 1% to 4% in 2023, while warehouse rents could still outperform, given resilient underlying demand.

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