Chart of the Day: Surge in warehouse supply puts pressure on rents

Average warehouse rents have already fallen 11% in 3Q16.

Industrial REITs' warehouse segment will remain under pressure as supply surge, Moody's Investors Service said.

"We expect warehouse supply additions will exacerbate the industry’s capacity overhang and continue to weigh on industrial occupancy and rental rates. Demand will remain subdued as industrial customers adopt a cost-sensitive and cautious attitude towards real estate consumption in light of the weaker economic conditions in Singapore," the firm noted.

Some of these industrial REITs with warehouse assets include Mapletree Logistics Trust, CIT, Soilbuild REIT and Viva.

Meanwhile, CBRE Research said average warehouse rents have fallen 11% to SGD1.47 psf/month in Q3 2016 from SGD1.65 psf/month in early 2015. Warehouse occupancy rates have also weakened to 89% in Q3 from 91.4% in 2015.