Cost jitters pester industrialists as rents nosedive

Leasing transaction and strata-titled sales are dwindling.

Macro-economic troubles are bothering industrialists, and the outlook isn’t getting any better soon.

The numbers tell the story as the number of leasing deals (inclusive of warehouse, factory, and business park premises) fell to 2,081 in 3Q compared to 2,392 for the previous quarter, according to data from the URA.

According to Colliers International, industrialists are having more second thoughts in committing to their real estate requirements due to economic uncertainties.

“Cost containment also continued to feature prominently on tenants’ corporate real estate agenda when they assessed their space needs. This affected the volume of leasing deals and weighed down on rents. Landlords were also seen adopting a more flexible stance during negotiations,” Tan Boon Leong, Colliers International executive director of industrial services said.

Meanwhile, things aren’t looking any better for the succeeding quarter.

“Taking into account the global downside risks and lacklustre manufacturing sector performance, most industrialists are expected to stay cost conscious and cautious with regards to their business and real estate needs. This might also lengthen the decision-making process,” Colliers International said.

“In light of the above, and given the heightened competition for qualifying tenants as a result of the availability of ample choices in the market, rents could continue to ease in the months ahead,” they added.

Colliers International said rents for prime multi-user conventional industrial space are projected to dip further by up to 1.0% in 4Q 2015, while business park rents could experience a small rate of decline that is similar to that seen in 3Q 2015.

“However, rents of independent high-specs industrial premises could remain stable for the rest of the year on the back of limited supply,” they said.