Empty industrial spaces litter Singapore as businesses closures mount

Sector vacancy is expected to increase by 12%.

Industrial space landlords are having a hard time finding occupants for their properties as analysts predict demand for the properties to remain weak until the next year.

According to a report by DBS, this is due to the increasing number of business closures and consolidations, and amid a surge in new supply completions.

“As such, net absorption is expected to remain negative at 395,000 square metres (sqm) to 776,000 sqm, resulting in vacancies spiking to in excess of 10% in 2016 to 2019,” the report noted.

As a result, the report added that net absorption is expected to remain negative at 395,000 square metres (sqm) to 776,000 sqm, resulting in vacancies spiking to in excess of 10% in 2016 to 2019.

Due to the one-two punch of headwinds, DBS said landlords are likely to turn on the defensive as they face both increased competition from new spaces as well as new consolidations.

“In our view, the multi-user and single-user factory space will face the brunt of the ongoing restructuring efforts and landlords should consider upgrading their properties to higher specifications in order to remain competitive and stand out among the competition,” the report noted.

Meanwhile, in the warehouse space, landlords can also consider attracting demand by upgrading their warehouses in order to meet the changing demands of end-users.

“Apart from typical end-users in the third-party logistics (3PLs) space, we believe that new and emerging demand drivers will come from the food & beverage industry (F&B), fast moving consumer goods and ecommerce players, which will drive growth in the medium term,” the report said.