Industrial rents increased for sixth straight quarter 1Q2022

SINGAPORE (EDGEPROP) - Industrial rents in Singapore climbed 1% last quarter, marking the sixth consecutive quarter of rental increase. The latest quarterly increase is also the strongest quarterly rental growth the sector has seen since 3Q2013.

The total available industrial stock also increased by 3.6 million sq ft and is the largest quarterly increase since 2019. This comes as most of the scheduled new supply which were hampered by delays in 2H2021 is completed.

Significant projects that were completed include JTC Defu Industrial City, JTC AeroSpace Three, Ubix, a single-user factory/warehouse by Shimano at 11 Bulim Walk, and a single-user factory by Microsoft Operations at 31 Woodlands Industrial Park E9.

The rest of the year could see about 25.8 million sq ft of new industrial space enter the market. Close to half comprise single-user factories, of which 22% are warehouses. According to CBRE, the supply is relatively tight and developers are expected to pursue redevelopment opportunities to keep up with the strong demand for warehouse space in Singapore in the coming months.

According to Colliers, warehouse rents registered the highest rental increase last quarter at 1.5% q-o-q. Strong leasing activity and improving occupancies saw the vacancy rate of this segment drop to 10%.

“The availability for prime logistics space has been extremely tight and demand for storage space has spilled over to second-tier warehouses. Third party logistics players and end users have been actively looking for additional storage space to meet stronger consumption post-pandemic, especially amidst supply chain disruptions and a global shortage of semiconductor chips,” says Catherine He, head of research, Colliers Singapore.

The average occupancy for the whole industrial sector fell to 89.8%, 0.4 percentage points lower compared to 4Q2021. However, CBRE Singapore attributes this decline to the high volume of development completions last quarter.

“Occupancies are likely to bounce back in the coming quarters due to resilient industrial leasing demand. With supply chain disruption, demand for storage requirements from semiconductors, food, pharmaceutical and biomedical sectors is expected to remain strong for the rest of the year. In addition, we can expect renewed interest in the aerospace segment with further re-opening of borders,” says Tricia Song, Head of Research, Southeast Asia, CBRE.

He of Colliers adds that demand for industrial space this year will be underpinned by growth industries such as food, media, logistics, technology and biomedical sectors. Competition for high specification warehouses will be especially strong given the demand for high-quality industrial space.