More industrial properties sitting empty as large manufacturers exit

Companies can't cope with subletting rules.

The number of vacant industrial properties is expected to rise in coming quarters as more multinational manufacturers relocate or consolidate their operations in a single location, according to a report by CBRE.

Among the manufacturers which have chosen to shut down operations in Singapore over the past year are Teijin, Tate & Lyle and KTL Global. Teijin closed its plant in Jurong Island after losing out to low-cost Chinese rivals, while Tate & Lyle closed its sucralose plant to consolidate in a plant in Alabama. KTL Global chose to relocate to Johor.

CBRE noted that this number is likely to rise as more end-users who are unable to comply with the 70-30 sublet rule move out of their facilities. This, in turn, will lead to an increase in saleable assets. 

However, buyers will be in short supply given the challenging rental market and government anti-speculative measures.

In Q1 2016, the preliminary tally of industrial investment sales as tracked by CBRE Research stood at approximately S$131.72 mil, reflecting an 82.4 per cent quarter-on-quarter or 75.4 per cent year-on-year decline.