Gutsy e-commerce start-ups rescue struggling industrial landlords

Small online players can boost space demand.

If industrial landlords are struggling to find tenants for their properties, then they should consider tapping small e-commerce players for much-needed growth.

A report by CBRE highlighted that e-commerce could pick up the slack from manufacturing, particularly under the Urban Redevelopment Authority's 60-40 ancillary use rule.

Under URA guidelines, industrial properties are segregated for use by a 60-40 quantum, where 60% is predominantly used for core industrial activities and 40% for ancillary uses.

In the past, this rule has benefitted large retailers such as NTUC and Gain City, who have managed to incorporate retail components into their industrial developments under the rule.

"The pool of end-users for industrial space may be extended further to include e-commerce start-ups. Previously, this group of users was hindered by barriers of entry such as high occupancy costs and inability to occupy the minimum GFA requirement in industrial developments," CBRE said.

"However, by consolidating uses and re-adapting the 40 per cent ancillary use, this creates a win-win situation for landlords, consumers and entrepreneurs. In addition to injecting fresh demand for a muted industrial market, it creates a viable operating business environment for start-ups, this promoting the development of the e-commerce scene," CBRE added.